Federal Finance Minister Ishaq Dar called on President Dr. Arif Alvi at Aiwan-e-Sadr to discuss the country’s economic policies.
During the meeting, the finance minister briefed the president on the overall economic and financial situation of the country. The finance minister also briefed the president on International Monetary Fund (IMF) bailout loan conditions.
Also Read: Mini-Budget includes some Tough measures – Finance Minister Ishaq Dar
The meeting also discussed the imposition of Rs170 billion in additional taxes via a mini-budget. Some sources said that the federal cabinet is likely to approve the imposition of Rs170 billion through the Mini Budget today.
The coalition government has started implementing ‘tough conditions’ tabled by International Monetary Fund (IMF) to revive the $7 billion Extended Fund Facility (EFF) stalled for months.
Earlier Virtual talks between the International Monetary Fund (IMF) and the Pakistan Government for the completion of the ninth review of the $7 billion loan program have officially begun.
On 9th February, Pakistan failed to reach any Staff level of the agreement regarding the IMF Bailout Package of the Extended Fund Facility (EFF) Program.
After this International Monetary Fund (IMF) handed over the Memorandum of Economic and Financial Policies (MEFP) to Pakistan after the conclusion of the talks. Pakistan received the Memorandum of Economic and Financial Policies (MEFP) draft from the IMF.
To meet IMF conditions for reviving the loan program under Extended Fund Facility (EFF), the federal government has decided to hike the tariff by Rs7.91 per unit.
According to reports first unit adjustment will be made from Feb to March 2023, 2nd adjustment will be made from March to May 2023, 3rd adjustment will be made from June to Aug 2023 and4th and the last adjustment will be made from September to November.
Under the circular debt management plan, the government will charge Rs3.21 per unit from now onwards, 69 paise from March-May, and increase again to Rs1.64 per unit from June onwards to August of 2023. From Sep-Nov, the govt will hike the power tariff by Rs1.98 per unit.
The consumer base tariff will be increased from Rs15.28 per unit in June 2022 to Rs23.39 per unit till June 2023. The government also approved the withdrawal of an electricity subsidy of Rs 65 billion given to the exporters, with effect from March 2023.
Furthermore, the PDM govt gave the go-ahead to the recovery of pending fuel cost adjustment from consumers of less than 300 units per month at an average rate of Rs 2.17 per unit to collect Rs 68 billion.
Sources further claimed that the federal cabinet also approved the withdrawal of an electricity subsidy of Rs 65 billion given to the exporters and farmers, with effect from March 2023. The subsidy of Rs12-13 paise per unit on electricity given to the export sector will be withdrawn, they added.
Moreover, almost Rs250 billion will be recovered from electricity consumers by June 2023. Under the circular debt management plan, the government would impose a surcharge of Rs3.39 paise per unit.
The International Monetary Fund (IMF) last week issued an official statement over the conclusion of the 9th review talks on the stalled loan program.
IMF mission chief to Pakistan Nathan Porter, in a statement, said that the timely and decisive implementation of policy measures along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development.
The statement, issued after the mission concluded its 10-day Pakistan visit, welcomed Prime Minister Shehbaz Sharif’s commitment to implement policies that are required to “safeguard macroeconomic stability”.
He also thanked the authorities for the “constructive discussions”.
Earlier this week The International Monetary Fund (IMF) expressed dissatisfaction over financial indiscipline and mismanagement in government offices and departments.
The IMF often provides assistance to countries facing financial difficulties and may advise governments on how to improve their financial management practices to restore financial stability and promote economic growth. According to sources, the IMF has expressed dissatisfaction over the persistent deficit in state-owned entities.
“There is a lack of improvement in electricity and gas transmission losses,” IMF pointed out. “Pakistan continuously bearing losses in the energy sector,” the IMF delegation observed. “It insisted on privatization of the state entities bearing losses,” sources said.
Some credible sources claim that “IMF is also demanding eliminating corrupt practices and retapes in government entities and business-friendly and convenient tax collection mechanism,”
The lending institution has demanded the privatization of Balloki and Haveli Bahadur Shah LNG power plants, privatization of government banks running in losses, House Building Finance Corporation, and other state-owned entities.
Sources claim that if IMF determines that a government is not adhering to sound fiscal practices, it may delay or withdraw its support.
Prime Minister Shehbaz Sharif while chairing an apex committee in Peshawar said that the International Monetary Fund (IMF) was giving Pakistan “a Tough time” for unlocking stalled $7 billion loan program.
Premier said “As we all know, an IMF delegation is in Islamabad for holding talks on the stalled loan program and giving a very tough time to the finance minister and his team,”
Premier said, “Our economic situation is unimaginable” adding “You all know we are running short of resources,” Sharif said, adding Pakistan “at present was facing an economic crisis that’s beyond imagination.”
Declaration of Assets
The International Monetary Fund (IMF) demanded Pakistan amend its laws regarding the assets declaration of public servants.
According to the sources inside the Federal Board of Revenue (FBR), the IMF requested the public declaration of the government servants’ assets. not only this but the IMF also demanded details of the overseas assets of the bureaucracy, sources said.
Sources said that The IMF has also demanded to make public the government officers’ assets. IMF Proposed setting up an Electronic Assets Declaration System for transparency.
“Bureaucrats’ assets will be checked prior to the opening of a bank account,” sources said. “Banks will get information from the FBR for the opening of accounts of bureaucrats.”
“All 17 to 22 Grade officers have to provide all information before opening a bank account,” sources said.
It is to be Pertinent that The IMF asked Pakistan to impose roughly Rs600-800 billion in additional taxes in the second round of talks to revive the $7 billion Extended Fund Facility (EFF) stalled for months.
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