ISLAMABAD: Even after tall claims made by Finance Minister Shaukat Tarin regarding a staff level agreement between Pakistan and the International Monetary Fund (IMF), Federal Government has failed to convince the Fund with its justifications for the recently announced amnesty scheme, said a report.
A report published by media stated that the IMF has doubts over the financing sources of the prime minister’s relief package and the financial impact it would have on electricity and petroleum prices.
Despite hopes to get a positive response from the IMF, the government and the Fund are unlikely to conclude the ongoing seventh review of the $6 billion Extended Fund Facility (EFF) anytime soon, the publication reported.
According to the report, the delay in conclusion could also delay the disbursement of two tranches worth around $1.9 billion till the federal budget due in June, which is also subject to the outcome of a no-confidence motion against PM Imran Khan.
Meanwhile, the IMF staff mission raised more questions on the estimated impact of relief measures announced by the government and their financing guarantees after the final round of policy-level talks with Finance Minister Shaukat Tarin.
The mission was completely dissatisfied with the government’s arguments favouring the money-whitening scheme for the industrial sector
“You had written and signed a memorandum of economic and financial policies (MEFP) that there would be no more amnesty scheme,” the publication cited a source as quoting the IMF side telling Tarin and his team.
The lender is critical of the government’s third tax amnesty scheme regardless of a recent withdrawal of tax distortions through the removal of GST exemptions in the mini-budget agreed under the last review leading to the revival of the EFF after a nine-month hiatus and later to the disbursement of over a $1bn tranche.
“We also reaffirm our commitment to not granting further tax amnesties (continuous structural benchmark) and avoiding the practice of issuing new preferential tax treatments or exemptions,” the written undertaking by Finance Minister Tarin and State Bank Governor Dr Reza Baqir had said.
Report further stated that the numbers worked out by the IMF mission were fairly high than the estimates and data provided by Pakistani authorities.
The Fund’s mission had reportedly gathered a different set of data in private meetings with some stakeholders in the energy sector, including refineries and oil companies,
On Sunday, the Finance Minister had said that IMF has asked Pakistan to explain how it would fund a $1.5 billion subsidy package announced by PM Imran Khan.
“There are no issues. We have given them details as to where the funds would come from,” Tarin said, adding the IMF wanted details of the resources to fund the subsidy in fuel and electricity, which Pakistan has frozen for the next four months until the new budget.
The IMF has begun the seventh review of the $6 billion rescue package agreed with Pakistan in 2019, and Tarin said he will have a final meeting with the lender on Tuesday.
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