• Additional income measures are not imposed; Fiscal objectives to be maintained through expenses control
• MEFP is still ending before the agreement at the personnel level
• Approval of the Executive Board of the expected IMF at the beginning of next month
Islamabad: Pakistan and the International Monetary Fund (IMF) concluded on Friday the first biannual review of the extended fund installation (EFF) of $ 7 billion in a positive note, without imposing additional income measures.
On the other hand, the Government promised to maintain fiscal objectives through expenses controls, particularly the development program.
However, official sources confirmed that the draft memorandum of economic and fiscal policies (MEFP) was still being completed before the formal announcement of a personnel level agreement (SLA). This would be followed by the approval of the IMF Executive Board for the disbursement of approximately $ 1.1 billion at the beginning of next month.
Therefore, both parties remained silent about the conclusion of the conversations, although the Minister of Finance, Muhammad Aurengzeb, during the course of a conclusion meeting on Friday morning, asked the IMF to issue a statement of mission end at night.
However, the time gap and the travel schedule of the mission were delaying their broadcast, said an official who attended the meeting. “There are no pending problems,” he said.
The officials said that the most challenging aspect of the two -week commitments referred to gas rates for industrial captive energy plants, but a resolution was achieved to the satisfaction of the IMF delegation, directed by the head of the Nathan Porter mission.
The approval of the law for the introduction of agricultural income tax by the four provincial assemblies was also considered a historical step, and the two parties agreed that it should be done a lot in the field for effective recoveries from the budget next year. The two parties would remain committed in the coming months to address the technical and procedure problems to align four provinces.
The macroeconomic indicators reviewed, particularly GDP growth projections, led to a downward review of federal tax collection estimates in more than RS600BN. The original budget projection of RS1.29 billion has now adjusted to RS1.23tr.
The officials said that the Mission of the IMF staff appreciated the general performance of the reference points and the objectives, but not without emphasizing the improved collections of the retail and wholesale sectors where the authorities have fought so far to meet the objectives.
The background team also requested improvements of real estate sectors. The Federal Income Board (FBR) reiterated its proposal to relieve taxes on the real estate sector to obtain better recoveries. The two parties can discuss it more in the period prior to next year’s budget.
The estimates of the second quarter for GDP resulted in the downward review in the size of the economy to approximately RS116TR from RS124TR estimated for the current year in the 2024-25 budget. The lowest inflation and economic growth that are projected were considered legitimate factors for the income deficit, but even within the objectives of the relationship imposed on GDP.
Informed sources said that the two parties would remain in contact virtually to finish the MEFP and the SLA and even thereafter for the budgetary consultations of next year.
The sources stressed that for the first time in the previous reviews of the program, the electricity sector had also met its objectives in the back of higher base rates, lower interest rates, stable currency, etc., although technical losses and insufficient recovery worried the IMF mission.
The IMF also emphasized the improvements in the track and trace system in all sectors and a greater implementation of point of sale (POS) systems in commercial activities. He also requested strong efforts to privatize energy distribution companies and Pakistan International Airlines (PIA).
The authorities anticipate receiving the second section of more than $ 1 billion under the loan program of $ 7 billion, which is largely considered a formality after compliance with the key quantitative performance criteria, the structural reference points and the indicative objectives.
The 37 -month rescue package was ended in July last year depending on the budgets approved by Parliament and was formally signed in September 2024. The first section of $ 1.1 billion was launched in advance, with the remaining seven equal deliveries scheduled every six months, contingent to meet the performance objectives.
Posted in Dawn, March 15, 2025
