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ISLAMABAD: Finance Minister Ishaq Dar said Monday that a discussion with the International Monetary Fund (IMF) in Geneva focussed on revenue shortfall and super tax in litigation, as well as narrowing down issues on power and gas rates.

This was stated by Dar in response to a question during a press conference of Prime Minister Shehbaz Sharif on Wednesday. However, he was neither asked nor did he mention any discussion with the IMF on the widening gap between inter-bank and open market rates.

He said that he and his team held a detailed meeting with the IMF on the sidelines of the Geneva Conference and issues have been narrowed down on power and gas sector reform.

He added that on the fiscal side a special tax of 10 percent which has been delayed due to a court’s stay order and they were informed that it would be recovered by the Federal Board of Revenue (FBR) in staggered manner and this is the reason that the revenue target has not been changed. He said that the Fund also wanted the withdrawal of untargeted Kissan and Exporters packages.

He said that the government would take fiscal measures to make up for shortfall of December 2022 but it would be targeted and categorical, and would not burden the common man. He said that the flood levy would be a one-off step.

Meeting between Dar, IMF officials: Pakistan reaffirms commitment

He also clarified that the government will not take over foreign exchange reserves of the commercial banks and later tweeted that “national foreign exchange reserves always include forex held with SBP and commercial banks. Recently, I quoted the forex reserves figure based on this principle. Some vested elements who ruined this country’s economy in the past, gave it a deliberate twist and started a campaign”.

The finance minister said that gas circular debt has increased to Rs1,600 billion and the government wanted to reduce the total quantum, as well as slow down the flow but maintained that the government would not burden the common man.

Dar said that the reconstruction plan for the flood-hit areas is for a period of three years and every year government would have to spare Rs650 billion from the PSDP and provincial ADP, for which, they are being taken on board.

Dar said that the project loan financing announced by the WB, the IDB and the ADB, as well as the AIIB has already gone over $8 billion, whereas, it is not clear whether $1 billion of Saudi Development Bank was programme lending or the project loan.

We have decided that half of the total $16 billion need assessment worked out by global agencies in collaboration with Planning Commission should be picked up by the global community and the remaining half would be picked up by the government, Dar said.

Reuters adds: Pakistan will take fiscal measures set by the International Monetary Fund (IMF) to meet its budgetary targets for the 2022-23 financial year, finance minister Ishaq Dar said on Wednesday.

The measures included reviewing subsidies in the farming and export sectors and shedding energy sector debt, he said.

The minister told a news conference in Islamabad that a “detailed discussion” had taken place with the IMF on the sidelines of a climate conference in Geneva on Monday, where the lender had emphasized a need to take the fiscal measures.

A 9th IMF review to clear the release of the next tranche of funds to Pakistan has been pending since September, as the country faces a severe economic crisis with its central bank foreign reserves falling to a critical level of below $5 billion, which is barely enough for three months of imports.

Pakistan does not have any plans to take over commercial bank’s foreign reserves, Dar said in a statement after the news conference, hoping the central bank reserves would improve soon.

“They (IMF) think that we should take some fiscal measures, like if there are some un-budgeted subsidies,” he said, adding the latest discussion had narrowed down the issues on the IMF’s agenda.

“We will achieve all our budgetary targets,” he said.

Dar said that the IMF had taken up the subsidies in the export and farming sectors and the energy reforms, adding: “We will do it but it wouldn’t burden any common man, it will be very targeted and categorical.”

The minister did not elaborate on whether the subsidies would be cut or withdrawn altogether, saying it would be worked out, adding that the gas sector debt would be reduced from dividends of the companies.

Pakistan’s power regulator has already allowed Sui Northern Gas Pipeline Ltd (SNGPL) and Sui Southern Gas Company (SSGC) to hike rates up to 75%, which is subject to cabinet approval.

Copyright Business Recorder, 2023

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