Pakistan and the International Monetary Fund (IMF) have not yet reached a staff-level agreement, which is necessary for the completion of the second review and the third tranche of $1.1 billion. The IMF mission to Islamabad has been extended for one more day to resolve the ongoing issues before the agreement. These issues include high-level assurances,
like Prime Minister Shahbaz Sharif’s commitment to increasing electricity and gas prices from July 1, 2024, and the revision of fuel prices. Provinces have agreed to generate Rs 600 billion in surplus revenue, but the issue remains problematic as the MEFP is expected to be amended to finalize it to build consensus. Another issue is that the IMF wants to announce the scheme for retailers, but the FBR is trying to convince the visiting team that this scheme should be launched in the next budget, as it will require a lot of effort it will not have any positive impact on overall income.
The FBR hopes to achieve the tax collection target of Rs 9415 billion by 30 June 2024. Pakistan may also inform the IMF guest mission of its intentions to seek another long-term bailout package under the Extended Fund Facility (EFF). The formal request will be made on the sidelines of the annual meeting of the IMF World Bank on April 15-20. The Pakistani delegation, headed by the Finance Minister, will attend from April 17 to 20. A senior official confirmed that the time frame does not allow the two sides to drag out negotiations on the staff-level agreement further, as the standby agreement will expire on April 12.
For the FBR’s monthly tax collection target, it needs to collect Rs 879 billion by March 2024, while Rs 2707 billion is expected to be collected in the second quarter, April-June, to achieve the desired revenue target of Rs 9415 billion. So far, the FBR has collected Rs 5829 billion in the first eight months (July-February) of the current financial year. On the direction of the Prime Minister, FBR has released additional funds, making it challenging to achieve the revenue collection target by June 2024. The target of 9415 billion will prove to be a huge challenge.
There is no meeting scheduled with the relevant ministries and departments on Tuesday, but a draft Memorandum on Monetary and Economic Policy (MEEP) is scheduled to be discussed with the finance ministry and finalized. There are concerns as to whether the IMF staff-level agreement will adjust the scheme for retail sales to enable the issuance of the third and final tranche of $1.1 billion under the $3 billion Standby Agreement Program. However, there has been no response regarding the review mission until the filing of this report.
