ISLAMABAD: In its preliminary assessment ahead of the long-delayed in-person talks, the International Monetary Fund (IMF) has cut the budget estimate for the fiscal year 2022-23 by Rs 2 trillion (or over Rs 2000 billion). Violation indicated, warning. JEE News reported on Saturday that the primary and budget deficits could widen by large margins.
Talks between Pakistan and IMF officials to conclude the ninth review under the Extended Fund Facility are scheduled to begin on Tuesday (January 31), during which fiscal deficit and data reconciliation will be key topics of discussion. will
The government had envisaged a budget deficit target of 4.9 per cent of gross domestic product (GDP) and a core deficit to keep it at a positive 0.2 per cent of GDP at the time of budget announcement for 2022-23.
According to the sources, the IMF is currently asking the Pakistani authorities to take additional tax measures of 600 billion rupees through the mini-budget.
Sources told JEE News that Pakistani officials did not agree at all and argued that the core deficit would not widen to such an extent.
It should be noted that there are now listed areas where the two sides have different views and will have to iron out the differences by February 9 to move towards a staff-level agreement.
Senior IMF officials have also decided to limit the increase in revolving credit to Pakistan’s cash-bleeding energy sector as part of the current fiscal year 2022 core deficit above the limit agreed with the lender of last resort. Will add more. -23.
It should be noted that the basic deficit is calculated after excluding debt service requirements.
Meanwhile, Pakistan has requested a waiver of Rs 500 billion from the IMF to account for the current fiscal year 2022-23 budget deficit, particularly the primary deficit, on account of flood expenditure.
“The IMF has so far calculated that the primary deficit target of 0.2 percent of GDP will be breached by a wide margin with a cumulative figure of over Rs 1 trillion,” confirmed informed sources.
The IMF further estimated that the coalition government has not recovered fuel price adjustments worth Rs 65 billion for the current fiscal year. The government provided subsidized electricity and gas to export-oriented sectors, resulting in an increase in demand of Rs 110 billion.
It should be noted that there is no provision in the budget in this regard.
Additionally, there is a slippage on the fiscal side due to increased total debt provisioning requirements as the government envisaged Rs 3,950 billion in the initial budget estimate, which has now increased to Rs 5,000 billion as a result of the policy rate hike. can reach State Bank of Pakistan.
1,000 billion rupees will be met for the provision of debt.
Additional tax measures
On the revenue side, the IMF estimated that the Federal Board of Revenue’s (FBR) tax collection is likely to be around Rs 7,000 billion for the current fiscal year, against an expected target of Rs 7,470 billion.
The FBR faced a shortfall of Rs 225 billion in achieving the December 2022 tax collection target.
However, it was argued that the monthly target of December 2022 was too far-fetched and could not be realized due to lengthy court proceedings.However, officials assured the fund that they hoped The money will be recovered this year. coming months.
The FBR has internally estimated that it may face a shortfall of Rs 170 billion to achieve the target of Rs 7470 billion due to import compression. On the other hand, in order to achieve the fixed target of 855 billion rupees in the collection of Petroleum Development Levy (PDL), there will be a shortfall of 300 billion rupees.
With all these points included, the IMF estimated that the primary deficit could rise to around 1.1 trillion rupees or 1.3 percent of GDP.
“If the IMF provides relief of Rs 500 billion on flood costs, the remaining Rs 600 billion gap remains on the fiscal front,” the source said, adding that the gap increases to Rs 600 billion that the fund has allocated to Pakistan. asked to be filled through additional taxation measures. .
IMF mission chief Nathan Porter is expected to visit Pakistan later this week for policy-level talks with Pakistani officials.
