In a meeting with the representatives of the international lending agency International Monetary Fund (IMF) on Monday, Minister for Finance Shaukat Tarin expressed the incumbent government’s unwavering commitment to the fund’s extended fund facility (EFF) programme, and hoped to successfully complete the upcoming review as well as Article IV consultations.
The meeting happened as the nominated resident representative of IMF to Pakistan Esther Perez paid a courtesy call on the country’s Finance Minister while on a pre-assignment visit. The meeting was also attended by the outgoing IMF resident representative, Teresa Sanchez. Esther Perez Ruiz is scheduled to take over as the resident representative of the IMF for Pakistan in November this year.
Tarin informed the visiting personnel of the steps the Imran Khan led government is taking to pursue a sustainable and all-inclusive economic growth through a bottom-up approach. The bottom-up approach is aimed at lifting the economically vulnerable and marginalized strata of Pakistani society.
Ms.Esther Perez Ruiz, the nominated resident representative of the International Monetary Fund (IMF) paid a courtesy call on the Federal Minister for Finance and Revenue Shaukat Tarin @shaukat_tarin at the Finance Division https://t.co/i1kGQrzZAu pic.twitter.com/cYixGcMUZQ
— Ministry of Finance (@FinMinistryPak) September 27, 2021
The measures being taken by the ruling party to shield the populace from the prevalent economic conditions were also mentioned by Tarin. “The government is taking a range of administrative, policy and relief measures to absorb the upward pressure on prices of basic food commodities due to the pandemic,” Tarin was quoted as saying.
Unprecedented tax revenue collection by the FBR in the previous fiscal year was lauded by the minister during the meeting. Tarin informed the IMF officials that the government is staunchly committed to broadening the tax base.
Furthermore, the finance minister said the government will formally launch the ‘track and trace’ system for tobacco products on Oct 1 this year, which is a part of the requirements of the EFF programme. Moreover, the minister told the IMF team that reforms were being carried out in the power sector to address the issue of circular debt.
Additional Secretary Power Division, Waseem Mukhtar, stated before the National Assembly Standing Committee on Power, that the incumbent government has increased the power tariff by 40% – from PKR.11.72 to PKR.16.44 – over the past three years.
Despite this increase in tariff, circular debt has doubled since the PTI government took the reins of the country in 2018. The energy sector circular debt was PKR 2.28 trillion as of June 30th this year, but in just a span of one month, reached PKR.2.324 trillion. This increase in circular debt is a direct outcome of the government’s unpaid subsidies with distribution companies bearing its brunt.
Pakistan was in talks with the International Monetary Fund (IMF) to try to ease “tough conditions” on a $6bn loan in May this year. “The targets they have given us are tough. We have talked to them and they are very sympathetic,” Tarin said earlier this year after taking over as the finance minister. Pakistan’s 39-month EFF arrangement was approved by the Executive Board of the international lender on July 3, 2019 for 6 billion dollars. This is the IMF’s 13th structural adjustment programme for Pakistan since 1988.