Monday, February 06, 2023
ISLAMABAD: Pakistan and the IMF will kick-start policy-level talks from Tuesday as both sides will strive again Monday (today) to reconcile the yawning gap in the fiscal framework.
The policy-level talks between both parties, which were to begin today, will start on Tuesday (tomorrow), The News reported.
As per the Fund's assessment, Pakistan faced a primary deficit gap of 0.9% of gross domestic product (GDP) equivalent to Rs800-850 billion mainly because of less tax and non-tax revenues and increased expenditures.
However, the Pakistani side did not accept such a fiscal gap, arguing that it was estimated to the tune of 0.5 to 0.6% of GDP in the range of Rs400 to Rs450 billion for the current fiscal year.
The Washington-based lender assessed that the Federal Board of Revenue of Pakistan (FBR) might face a shortfall of Rs130 billion in achieving the desired tax collection target of Rs7,470 billion.
The government and the IMF might agree to abolish the reduced electricity tariff for the export-oriented sector and link it with export proceeds.
The textile sector is selling 40% of its produced items in the domestic market, so it is wrong to get subsidies on power and gas tariffs on the whole production.
“Differences still persist over ascertaining the exact fiscal gap between Pakistan and the visiting IMF review mission during the technical levels talks. Once it’s finalised with the IMF, then the additional taxation measures will be firmed up, which will be unveiled through the upcoming mini-budget. In view this of a lack of reconciliation over the figure of fiscal gap, the technical level talks will continue on Monday and then policy level talks are expected to commence from Tuesday,” sources confirmed while talking to a select group of reporters in the background discussions on Saturday.
Last week, the first round of technical talks between Pakistan and the IMF concluded on Friday and now the global lender is supposed to share nine tables comprising macroeconomic and fiscal framework with Pakistan.
If both parties reach a consensus on prescriptions to fix the economy by February 9, then the two will sign a staff-level agreement.
The ongoing negotiations between the two sides, which started on January 31, have been termed "tough" by Prime Minister Shehbaz Sharif.
The premier, while speaking at a meeting in Peshawar on Friday, said that the IMF is giving "a tough time" to Finance Minister Ishaq Dar and his team, hinting at harsh measures to be taken to revive the stalled loan programme.
The Pakistani side explained the statement given by PM Shehbaz to the visiting IMF review mission, saying that it was meant to make up the minds of the masses for undertaking tough measures as politicians wanted to save their political capital. The IMF team was also told the PM’s statement was not meant to blame the lender for slapping tough conditions on Pakistan.