ISLAMABAD: In line with its plan to convince the International Monetary Fund (IMF) to complete its pending ninth review, Pakistan shared the outline of talks with top officials of the multilateral institution, hoping that Both sides will start virtual. Discussion from next week
A senior Finance Division official told JEE News that an email has been sent to the IMF and “we are awaiting their response.”
While the virtual talks are expected to begin on Monday, it is not yet known whether the upcoming talks will be formal or informal in nature. If formal talks begin, it will be a significant development as informal talks have been going on for the past two and a half months.
A senior Finance Division official also confirmed to JEE News that the government has shared the basic contours of the next round of talks with IMF mission chief Nathan Porter.
It is learned that both parties discussed the following issues:
- Fiscal stabilization, including additional tax measures and spending cuts to limit the budget deficit within the limits agreed with the IMF.
- Taking all necessary corrective measures like reducing revolving credit flows and stocks, increasing tariffs for electricity and gas sectors to lay out a sustainable roadmap for the cash-bleeding energy sector.
- Bringing exchange rates in line with free market mechanisms
The official added that the IMF mission chief briefed Pakistan on his readiness for virtual talks next week, and a review mission could visit Pakistan if needed.
“If all the thorny issues are resolved in the virtual meetings, a staff-level agreement could be reached in the next seven to 15 days without a physical visit,” the top official said.
Sources revealed that the IMF had already approached Islamabad to sign a staff-level agreement on the Memorandum of Financial Policies (MEFP).
“If the IMF mission visits and talks are inconclusive, it will be more damaging for the economy,” he said, adding that Pakistan could start talks from next Monday so that both sides Build consensus on the MEFP document.
Pakistan ready to introduce single exchange rate
Since the Fund is unlikely to allow multiple exchange rates, Pakistan has now agreed in discussions with IMF staff to use free-float and market-based rates. Will be ready to work out a mechanism for introducing a single exchange rate system.
Another area of further discussion with the IMF will be additional taxation to limit the budget deficit to the desired level. The Pakistani side will request the IMF to reduce the Petroleum Development Levy (PDL) target to Rs 855 billion with the argument that it will charge a maximum of Rs 50 per liter on POL products in the remaining five months of the current fiscal year. Will try to.
As for the Federal Board of Revenue’s (FBR) tax collection target of Rs 7,470 billion, it will remain unchanged while aiming for the highest ever tax collection for December 2022, revenue board officials argued. There was a mistake when FBR missed it. 225 billion rupees margin.
The Inland Revenue Service, which deals with major taxes including income tax, sales tax and federal excise duty, has expressed its readiness to collect Rs 20 to 30 billion per month for the remainder of this fiscal year.
However, FBR will face a shortfall of Rs 170 billion on customs duty collection due to import compression.
