ISLAMABAD (Newsman): Pakistan has filed an additional $ 1.2 billion financing from IMF on the climate disaster challenges it has faced over the years creating dips in the economy from unexpected rains.
Considerate of the Pakisyan request, the issue would be sent to IMF Board for Approval, which has already given such funds to 20 nations across globe.
IMF mission ended its brief visit with a short review and a constructive note, saying that economic policies and reforms leading towards same direction could provide the basis for stronger and sustain able growth.
The note came late last night from Nathan Porter IMF mission chief and issued from Washington. It held two meetings with Finance Minister, while multiple other meetings with Governor State Bank, Secretray Finance, other higher ups and representative from private sector.
The final statement, says, ““We (IMF Team) had constructive discussions with the authorities on their economic policy and reform efforts to reduce vulnerabilities and lay the basis for stronger and sustainable growth. We (IMF mission) agreed with the need to continue prudent fiscal and monetary policies, revenue mobilization from untapped tax bases, while transferring greater social and development responsibilities to provinces”.
Provincial Discussions
Few key point during these discussions were surplus from provinces, taxation reforms and energy sectors debt and not payment. These points were dragging reforms and were cause of concerns for the Fund, despite giving a positive end-note statement.
The final statement further mentioned, “In addition, (further to the above statement) structural energy reforms and constructive efforts are critical to restore the sector’s viability, and Pakistan should take steps to decrease state intervention in the economy and enhance competition, (PIA sale and energy sector reforms) which will help foster the development of a dynamic private sector. Strong program implementation can create a more prosperous and more inclusive Pakistan, improving living standards for all Pakistanis”.
It also says, “We are encouraged by the authorities’ reaffirmed commitment to the economic reforms supported by the 2024 Extended Fund Facility (EFF). The next mission associated with the first EFF review is expected in the first quarter of 2025”.
The statement from the Washington Rep Mayada Ghazala of IMF office saying, the “IMF Staff Concludes Visit to Pakistan” on November 15, 2024.
It also says, End-of-Mission (concluding) press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country.
The views expressed in this statement are those of the IMF (mission) staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.
IMF team visited Pakistan to engage with the federal and provincial governments, the State Bank, as well as representatives from the private sector on economic developments and policies.
IMF staff and the Pakistani authorities held constructive discussions on economic policy and reform efforts to reduce vulnerabilities and lay the basis for stronger and sustainable growth.
Islamabad, Pakistan: An International Monetary Fund (IMF) mission led by Mr. Nathan Porter (the mission chief) concluded a staff visit to Pakistan from November 12 to 15, 2024.
During its visit, the IMF mission staff met with senior officials from federal and provincial governments and the State Bank, as well as various representatives from the private sector.
Staff visits are a standard practice for (the member) nations with semi-annual program reviews and key objective is to engage with the officials and other stakeholders on the country’s economic growth and policies and the status of discussed reforms.
Efforts to Achieve Fiscal Deficit Targets
Finance ministry provided a revised budget’s fiscal operations data on its web portal that reduced down a major “statistical discrepancy” of Rs377.6bn on Punjab’s fiscal side of balance sheet to Rs177.6bn. Punjab government’s Rs40bn surplus is the smallest among the four provinces.
However, Smaller provinces agreed to the IMF’s condition to pull out of wheat support price or subsidised issue price, (while rovinces had been asking that it could create a food security problem for them), particularly in underdeveloped food regions like Khyber Pakhtunkhwa and Balochistan.
Agri Income Tax
Another key issue was the agri Income Tax – where provincial argument were that FBR has not been able to meet the compliance with income tax returns in 77 years even in the urban centres, how the provinces could only be doing it with farmers, mostly illiterate or semi-literate, would able to file income tax returns for agriculture incomes.
Pakistan’s agri tax revenue remained under Rs10bn, against a probable yield to the tune of Rs230bn.
Pakistan officials have vowed to enforce mechanisms by January 2025 to meet agricultural tax collection, targeting huge Rs1 trillion in revenue in a couple of years from now.
However, the IMF mission appeared willing to understand provincial problems, particularly capacity constraints and vowed to bring help in technical consultants, not only for farm tax but also for provincial financial management to the higher education, Benazir Income Support Program and devolution of provincial financial projects from the consolidated federal budget.
Sindh has reportedly yet to take a decision to finance these additional financial responsibilities.