IMF delegation expected to arrive this month to finalise next programme

• IMF team to spend around two weeks in Pakistan.
• Lender likely to propose heavy taxation measures.
• FBR mulls bringing monthly pensions into tax net.
  

ISLAMABAD: A team of the International Monetary Fund (IMF) is likely to reach Pakistan in mid-May to finalise the details of Islamabad's next bailout programme under the $6 to $8 billion Extended Fund Facility (EFF), The News reported on Thursday.

As per the publication, the IMF team will spend around two weeks in the country wherein it will chalk out the macroeconomic and fiscal framework for the next three to four years.

The government is expected to present the next budget 2024-25 around June 6 or 7 before parliament with the possibility of taking stringent measures aiming at achieving fiscal stabilisation, it added.

The development comes days after Pakistan, last month, made a formal request to the Fund seeking the next bailout package with the possibility of augmentation through climate financing.

"We expect the IMF mission to be in Islamabad around the middle of May — and that is when some of these contours will start developing," Finance Minister Muhammad Aurangzeb had told Reuters after meeting IMF's Managing Director Kristalina Georgieva last month.

However, the exact size and time frame will only be determined after evolving consensus on the major contours of the next programme in May 2024.

Meanwhile, IMF's Middle East and Central Asia Director Jihad Azour, in April, also expressed the Fund's readiness to support Pakistan and the package of reforms is now more important than the size of the new programme.

"I think what is important at this stage is to accelerate the reforms, double down on the structure of reforms in order to provide Pakistan with its full potential of growth," Azour told a press conference on the sidelines of the IMF 2024 Spring Meetings.

Last week, Prime Minister Shehbaz Sharif also met Georgieva on the sidelines of the World Economic Forum Special Meeting in Riyadh wherein both sides discussed Pakistan entering into another IMF programme to ensure that the gains made in the past year were consolidated and its economic growth trajectory remained positive.

The meeting followed the disbursement of SDR 828 million (around $1.1 billion)by the Washington-based lender as part of the third and last tranche under the $3 billion SBA with Pakistan which the country secured last summer to avert a sovereign default.

It is to be noted that the Federal Bureau of Revenue (FBR) is mulling bringing monthly pensions of Rs100,000 under the tax net with another proposal suggesting imposing a flat rate of 10% on the taxable ceiling amounts of pensioners.

The primary surplus has remained positive but the overall fiscal balance has been showing a worsening situation whereby the net revenue receipts were unable to meet debt servicing requirements, which proved to be the largest ticket item on the expenditure front.

With the Fund expected to propose heavy taxation measures and massive curtailment of expenditure to achieve fiscal consolidation, Islamabad is expected to request the IMF for augmentation through climate finance as being done by Bangladesh to jack up the size of the loan programme.

Egypt's programme size was also increased to $8 billion.