ISLAMABAD: Pakistan and the visiting staff mission of the International Monetary Fund (IMF) on Monday started policy level talks for disbursement of second tranche of about $453 million early next month under the $6 billion Extended Fund Facility (EFF) finalised in May this year.
A senior government official told Dawn that Secretary Finance Naveed Kamran Baloch and Governor State Bank of Pakistan (SBP) Dr Reza Baqir began the policy discussions with the fund led by its Mission Chief to Pakistan Ernesto Ramirez-Rigo. Prime Minister’s Adviser on Finance and Revenue Dr Abdul Hafeez Shaikh is expected to join the negotiations on Wednesday (November 6) for the concluding round, he added.
Sources said the venue of the negotiations was moved out of the Ministry of Finance to a local hotel where the members of mission were staying due to a precautionary advisory to the staff mission. Both sides were unable to meet the media, saying the press would be contacted at the conclusion of the talks.
The sources said the authorities were confident about the successful completion of the first quarterly review of the fund programme, leading to disbursement of second tranche in December. They said the current account had responded to the steps introduced by the finance ministry and the central bank more than the expectations while fiscal account targets for the first quarter had also been met.
It was reported that about Rs50bn budgetary savings had been achieved in the first quarter of the fiscal year through a tight check on additional supplementary grants while about Rs9bn savings were reported due to control over current expenditures. The sources said about Rs113bn slippages on the revenue side were partially met through these savings and better recoveries on account of non-tax revenue.
There were some concerns over the pace of expansion in the revenue shortfall and the authorities hinted at taking additional and corrective measures to achieve end-December targets. Discussions also took place over adjustments on the revenue side.
The IMF had disbursed in July this year about $991m on completion of all prior actions committed by Pakistan before signing the fund programme. The two sides have been in technical level discussions since October 28 for exchange of latest data relating to all the economic ministries and their entities.
The government was advised last week by the IMF team to strengthen cooperation at the federal and provincial levels for greater fiscal and economic coordination and asked the federal and provincial authorities to make maximum utilisation of development allocations to revive growth.
The authorities in Islamabad said they were comfortable with overall progress on the fund programme in the first quarter as its revenue shortfall had been more than compensated by higher than estimated non-tax revenues supported by licence fees provided by the telecom companies.
Under the fund programme, the government is to deliver on six performance criteria including those relating to net international reserves, net assets of the central bank, SBP’s stock of net foreign currency swaps and forward position, primary budget deficit, no government borrowing from central bank and a ban on government guarantees.
In addition, there are two continuous performance criteria including zero new credit to the government by the SBP and on accumulation of external public payment arrears. On top of that, the authorities’ performance is also reviewed on five indicative targets including disbursements under BISP, government spending on health and education, tax collections, payment of tax refunds and a freeze on power sector’s circular debt.
Published in Dawn, November 5th, 2019