9th review of Pakistan for USD 7 billion Extended Fund Facility kicks off with IMF

Islamabad [Pakistan], January 31 (ANI): The International Monetary Fund on Tuesday began its ninth review with Pakistan to strike a staff-level agreement on the ninth review under the USD 7 billion Extended Fund Facility (EFF), reported Geo News.

Finance Minister Ishaq Dar received IMF mission chief Nathen Porter and both sides are holding the toughest ever parleys for making renewed efforts to accomplish the pending ninth review under the USD 7 billion EFF. The IMF’s review mission had arrived in Islamabad a day earlier on Monday and Pakistan is expected to share its plan for additional taxation measures, reported Geo News.

The IMF visit to Pakistan scheduled for October has been delayed amidst differences between Pakistan’s commitment to the IMF on fiscal consolidation.
“Pakistan and the global lender continued talks virtually but differences still persisted over tax collection targets, and non-starter energy reforms including hiking of gas tariff, rising circular debt, and expenditure overrun, making consensus harder to strike on a staff-level agreement for completion of the review,” according to the Financial Post report.

The News International, earlier today, had reported that the government is expected to share its plan with the visiting review mission for taking additional taxation measures.
The discussion will revolve around Pakistan’s plan for taking additional taxation measures to fetch over Rs 200 billion through a presidential ordinance, rationalizing expenditure, and hiking both electricity and gas tariffs for erasing the monster of the circular debt.

The Washington-based lender is suggesting the toughest prescriptions on all fronts of the economy at a time when the foreign exchange reserves are persistently on the decline and touched the lowest ebb of USD 3.6 billion, reported Geo News.

Meanwhile, the government had already implemented two major conditions including allowing adjustment of the rupee against the dollar and hiking record levels of a surge in petroleum prices ahead of the talks.

The IMF is asking the government to fill the yawning gap of Rs 600 billion on the fiscal front through additional taxation measures or cutting down on expenditures in order to restrict the budget deficit and primary deficit within the desired limits, reported Geo News.

Differences persisted over the exact fiscal gap and both sides will hold parleys to evolve consensus over the exact estimates for taking additional taxation measures through the upcoming mini-budget.

Pakistan and the IMF will hold technical-level talks from today to Friday and then the policy-level talks will commence finalizing the Memorandum of Financial and Economic Policies (MEFP) document, reported Geo News.

The IMF further demanded an increase in electricity tariff within the range of Rs 12.50/unit as Islamabad seemed to agree to hike the electricity tariff of Rs 7.50/unit in a staggered manner.

The government may be agreed to withdraw the un-targeted power sector subsidies of the electricity and gas sector to powerful groups during the upcoming parleys with the IMF. The gas tariff will also be hiked in the range of 74 per cent for consumers, reported Geo News.

Finance Minister Dar is trying to secure USD 4-5 billion from bilateral friends for engaging the IMF with the point of strength but it could not be materialized so there was no other option but to make renewed efforts to revive the stalled IMF programme, REPORTED Geo News.