With revenues in focus, IMF team lands to review programme progress

Updated September 17, 2019

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The Interna­tional Monetary Fund’s (IMF) Middle East and Central Asia Director Jihad Azour along with an eight-member delegation arrived in Islamabad on Tuesday to hold formal talks with top government functionaries. — AFP/File
The Interna­tional Monetary Fund’s (IMF) Middle East and Central Asia Director Jihad Azour along with an eight-member delegation arrived in Islamabad on Tuesday to hold formal talks with top government functionaries. — AFP/File

ISLAMABAD: The International Monetary Fund’s (IMF) Middle East and Central Asia Director Jihad Azour along with an eight-member delegation arrived in Islamabad on Tuesday to hold formal talks with top government functionaries.

Amid his arrival, the government stepped up efforts to recover about Rs85 billion additional revenue from the electricity and gas consumers and firm up a road map to bridge gaps in tax collection.

The visit is being described as “routine” by both sides. A finance ministry representative said the delegation, headed by Azour and Mission Chief to Pakistan Ernesto Ramirez-Rigo, is here “to review the programme as per schedule.”

On its first day, the team held informal meetings with Adviser to the Prime Minister on Finance Abdul Hafeez Shaikh and Federal Board of Revenue (FBR) Chairman Shabbar Zaidi on Monday.

Schedule includes meetings with govt, regulators, SBP and MNAs

As per the proposed schedule of the visit, the delegation will remain in Pakistan until Sept 20. Another official said the delegation will hold marathon meetings with Hafeez Shaikh and top officials of the Ministry of Finance, Planning Minister Khusro Bakhtyar, Planning Commission officials and the Minister of Economic Affairs Hammad Azhar and his team.

The delegation will also meet with the chairpersons and members of the National Electronic Power and Regulatory Authority (Nepra), Oil and Gas Regulatory Authority (Ogra) and Securities and Exchange Commission of Pakistan before traveling to Karachi to hold discussions at the State Bank of Pakistan and other stakeholders.

The delegation will also interact with National Assembly’s Standing Committee on Finance led by former finance minister Asad Umar.

While Nepra has already set a date for hearing a Rs63.4bn claim for increase in electricity tariff, the Petroleum Division was set to seek passing on Rs22bn cost of imported Regassified Liquefied Natural Gas to residential, transport and power sector consumers to meet cash shortfalls of gas utilities.

The sources said that critical discussions were anticipated over FBR’s revenue collection challenges even though the government expects higher than targeted inflows from non-tax revenues to make up for the losses as evident from interactions between the local IMF staff and the FBR and finance ministry officials.

They said that FBR’s current year revenue target of Rs5.555trillion is based on base year revenue assumption of about Rs4.150tr for last financial year but actual recoveries were hardly close to Rs3.83tr, leaving a gap of about Rs450bn to begin with.

On top of that, the shortfall in the first two months of current fiscal year had gone beyond Rs64bn. Based on this, the IMF staff had doubts over Rs1.076tr revenue target for the first quarter that has to be bridged before the first review which is due in less than two months.

That is where the delegation seeks to have political commitment at the highest level during the current engagements followed by the PM’s upcoming visit to the United States later this week, the sources added.

Some outstanding issues also pertained to amendments in the laws governing Nepra and Ogra in a manner that prices determined by regulators automatically stand notified without involvement of the executive.

Nepra, which has called a public hearing on Sept 25, will consider power companies’ request to pass an additional burden of Rs63.407bn on to the consumers because of quarterly adjustments in the fiscal year 2018-19 and annual adjustment on prior period cost.

On the other hand, the 10 distribution companies (Discos) have also sought an upward adjustment of Rs30.262bn because of variation in Fuel Purchase Price for the last two quarters of 2018-19 while three of the Discos have also sought for the annual adjustments of prior period cost of Rs33.145bn.

The government had already passed on about Rs190bn quarterly adjustments to consumers under the IMF programme a few months ago along with up to 146pc increase in gas tariff.

Adviser to PM Hafeez Shaikh on Sunday described the delegation’s visit as a routine affair having no relation with the quarterly reviews.

The finance ministry has been saying that its reform agenda signed with the IMF was on track and progress so far on nearly all the performance and structural benchmarks for first quarter of the current fiscal year were very encouraging with strong indication that the targets will be achieved.

“The progress on nearly all the performance and structural benchmarks during Q1FY20 is encouraging and targets will be met. Finance ministry is fully committed along with the IMF towards the ongoing reforms programme”, said the ministry about a week ago.

Published in Dawn, September 17th, 2019