By Staff Reporter
ISLAMABAD: Minister for Finance Miftah Ismail on Monday claimed that the IMF programme was coming along very well, but the fund has not shared the nine tables with the Memorandum of Economic and Financial Policies (MEFP), required for the completion of combined reviews, which casts tons of doubts on the finance chief’s damage-control statements, raising serious concerns over the fate of economy.
In his tweet on Monday, Miftahl said, “I have been reading with some amusement all the tweets and stories about the IMF programme being postponed or delayed due to some anti-corruption law. There is no truth to it. The IMF programme is on track.”
However, top official sources confirmed to Independent Pakistan that the government sent responses to the IMF on different queries last Saturday evening.
But officials confirmed the IMF had not so far shared nine tables for explaining and reconciling macroeconomic and financial figures to comply with the MEFP document.
It indicates that the shared MEFP is still incomplete and Pakistan will have to do more spadework for signing the staff level agreement.
Without having nine tables along with the draft of MEFP, the staff level agreement will not be done. When it’s signed between the two sides it will pave the way for forwarding a formal request for granting approval of two reviews and release of a $1 billion tranche under the $7 billion Extended Fund Facility (EFF).
The official sources close to the Minister for Finance claimed last week that the staff-level agreement was expected to be done within the ongoing week.
“But if the nine tables have not yet been shared then how can the agreement be struck within the ongoing week?,” the official raised the question and added that the required tables might be shared with Pakistan after the announcement of upcoming monetary policy.
The Monetary Policy Committee is scheduled to meet on July 7, 2022 for taking decision on hiking the policy rate at a time when the CPI-based inflation surprised everyone by is at 21.3 percent.
Now if the policy rate is raised heavily then the monetary figures might result in bringing changes in all other tables framed by the IMF staff in reconciliation with Pakistani authorities.
Another outstanding issue, which the IMF may raise is the fund’s demand for a memorandum of understanding (MoU) among the Centre and provinces for generating revenue surplus by the federating units to the tune of Rs750 billion in this fiscal year’s budget.
Earlier, Pakistan and the IMF struck an agreement on the budget 2022-23, which was passed by the National Assembly and now enacted as Finance Act 2022. However, the government had to revise the budgetary estimates mainly because the government kept the Gas Infrastructure Development Cess (GIDC) at Rs200 billion but the IMF refused to accept it. Then the government had to revise the GIDC target downward from Rs200 billion to Rs30 billion. It created a hole of Rs170 billion. Secondly the revenue surplus target for the provinces was also reduced from Rs800 billion to Rs750 billion.
In order to bridge this gap on the fiscal front, the government was forced to slap additional taxes in the shape of Super Tax and other measures to bring high net worth individuals and companies in the tax net.
The IMF might also raise objections to Punjab’s announcement of not billing the users of 100 units of electricity as such generous subsidies are not IMF’s favourites, not even remotely. The IMF had placed its demand for strengthening of anti-corruption institutions in the list of structural benchmarks on the occasion of completion of the 6th review during the tenure of the PTI led regime; however, it could not be accomplished. Now the IMF wants its inclusion as prior action but Pakistani authorities are pursuing the IMF to extend the timeframe without changing its status from the structural benchmark.
“The IMF agreement still seems possible but the country will have to bring all its acts together as a piecemeal approach may not work,” the official concluded.
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