The Executive Board meeting of the International Monetary Fund (IMF) to approve the release of the ninth tranche is still to be scheduled after the successful completion of the eighth staff review (29th July-7th August) under the $6.64 billion Extended Fund Facility (EFF). The IMF schedule of executive board meeting has been updated till September 18 and Pakistan's review is not included in those meetings.
An official said that there may be some issues with respect to board meeting especially after some news items appeared in the foreign media that the IMF may not be giving an accurate picture of the Pakistan economy.
Additionally, the government may be having some difficulties in assuring the Fund that it would be able to implement the withholding tax on bank transactions following threats by traders that they would go on an indefinite shutter-down strike if it was not withdrawn. There are speculations that the Finance Ministry may be delaying talks with traders till after approval of the staff review and release of the next tranche before either completely or partially succumbing to their demands with revenue implications. The government committed to the Fund in an earlier mandated quarterly review that in the event that there is a revenue shortfall from what has been projected alternate revenue generating measures would be adopted.
The Fund stated in a press release after the completion of the eighth review that the end-June 2015 performance criteria on the budget deficit and government borrowing from the SBP were missed with a small margin. In addition, the indicative targets on tax revenue and accumulation of circular debt deviated from end-June 2015 programme targets. The mission welcomed the authorities' commitment to attain upcoming budget deficit and tax revenue targets and diversify sources of budget financing.
Sources in Finance Ministry on condition of anonymity said that the IMF executive Board meeting is expected to consider Pakistan's review at the end of the ongoing month and most probably paper work would be in final stages and the report finalised for onward submission to the IMF executive board.
They added that there were some prior actions attached to the release of the next tranche given some key decisions taken by the Finance Minister Ishaq Dar subsequent to the review. The review concluded on August 7 and Finance Minister on August 9 (Sunday) chaired a meeting in Finance Ministry to discuss measures for improving public debt management. He got a briefing from DG (Debt), Finance Division on steps taken for synchronisation of retail and wholesale debt. The Minister reportedly asked for data projections related to external debt and directed that EAD may regularly share the said data with the Debt Office. The meeting noted that there was a need to have an optimal composition between domestic and external debt portfolios for cost effectiveness.
On August 10, National Assembly Standing Committee on Finance approved amendments bill to the State Bank Act for establishment of monetary policy committee in line with the agreement with the IMF to grant autonomy to the central bank.
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