Pakistan to brief IMF on revenue measures

Islamabad March 30: Pakistan will discuss the recent revenue measures taken by the government with the International Monetary Fund (IMF) during the spring meetings (April 11 – 16) in Washington.

According to the IMF website, “Each Spring, thousands of government officials, the private sector, journalists, civil society representatives, and other interested observers gather in Washington DC for the Spring Meetings of the World Bank and IMF. At the heart of the gathering are meetings of the joint World Bank-IMF Development Committee and the IMF’s International Monetary and Financial Committee, which discuss progress on the work of the World Bank and IMF. Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial markets.”

Economists told this scribe that the spring meetings provide an appropriate forum to discuss generalities and any country delegation may present its views to relevant officials on the sidelines of the spring meetings but by and large the modalities of the stalled Stand By Arrangement (SBA) would have to be worked out when the IMF team dealing with Pakistan schedules a meeting. That’ is still not scheduled.

A senior official of the Ministry of Finance, on condition of anonymity however told this scribe here on Wednesday that the spring meetings of the Fund are scheduled to be held in Washington and the Finance Ministry has decided to discuss the recent economic reforms taken under SBA like the imposition of the 15 percent flood surcharge, 2.5 percent excise duty, 2 percent increase in the power tariff per month, and the withdrawal of 17 percent general sales tax exemptions on fertilizers, pesticides and tractors.

However the official did not mention that the withdrawal of sales tax zero rating facility on local supply for five major export earning sectors namely textiles, leather, surgical, sports and carpets has been suspended due to intense pressure with obvious negative implications on revenue collections.

“The delegation from Pakistan will be led by Minister of Finance Division, Abdul Hafeez Sheikh. The Pakistani officials’ team will depart for Washington on April 12”, the official disclosed.

While responding to a question asked by this scribe, he said, “at present Pakistan has no intention to seek another $ 3-5 billion IMF bailout package”.

He said that our increased remittances have beefed up foreign currency reserves to $ 17.4 billion that is quite pleasing.

The official said, “During our coming meetings in Washington, the Pakistani officials would try to finalize the dates of the next visit of the IMF team to Pakistan. The next visit is expected to be in May but nothing is finalized yet”.

The fifth review, originally scheduled to take place before end-September 2010, has been delayed. The structural benchmark on implementing a value added tax on July 1, 2010 and the end-June 2010 performance criteria on general budget deficit and government borrowing from the central bank were missed. Subsequently, the economic conditions deteriorated markedly as a result of the floods, requiring significant amendments to the 2010/11 budget. Corrective actions needed to complete the fifth review could thus not be implemented before the expiry of the SBA.


ENDS