The International Monetary Fund (IMF) has asked Pakistan to revise the financial framework for 2023-24 before it is approved by parliament, with the goal of reaching a staff-level consensus.
Pakistan and the IMF are working hard to get a thorough agreement on the budgetary framework since the Washington-based lender has stated that an agreement cannot be reached unless the budget is altered.
If the agreement is successful, the amended 2023-24 budget might be approved, with changes such as enhancing the Federal Board of Revenue’s (FBR) tax collection objective and cutting spending.
“The Pakistani side shared revised budgetary estimates for the next fiscal year with the IMF, but a broader agreement has yet to be reached,” said a top person familiar with the ongoing talks between Pakistan and the IMF, which took place electronically from Islamabad and Washington on Friday. As a result, the finance minister’s last speech has been postponed; it was originally scheduled for Friday. It could now be completed on Saturday (today) or Monday.
Following Prime Minister Shehbaz Sharif’s meeting with IMF Managing Director Christine Lagarde in Paris, Pakistan, and the IMF held two rounds of virtual negotiations in the previous 24 hours in an attempt to reach a staff-level agreement.
Although the Pakistani authorities shared revised budgetary estimates for the next fiscal year with the IMF review mission in the hopes of reaching a broader agreement on the budgetary framework, it remains to be seen how far both sides can reconcile their differences and reach a consensus on major thorny issues.
Finance Minister Ishaq Dar was scheduled to deliver his farewell address in the National Assembly today (Saturday), with the finished Finance Bill 2023 expected to be tabled before it, but it was possible that it might be delayed until Monday.
“Pakistan and the IMF held hours-long virtual talks on Thursday and Friday nights, during which Islamabad presented the IMF with a revised budgetary framework.” However, no broader agreement has been reached as of yet,” according to high official sources.
The talks could produce favorable outcomes, and both parties could move closer to reaching an agreement.
The current IMF plan under the $6.7 billion Extended Fund Facility (EFF) will end on June 30, 2023.
The IMF cited three major lingering difficulties, including the budgetary framework for failing to grow the tax base, eliminating tax expenditures, providing a tax amnesty scheme, closing the external funding gap, and maintaining a market-based exchange rate.
On the fiscal front, the government will need to establish a primary surplus, increase the FBR’s tax collection target, rationalize non-tax revenue targets, and cut spending.
When reached, an official stated that there had been frantic attempts in the previous 24 hours with the goal of a favorable conclusion. But it is premature to draw any conclusions at this point, he said, adding that there is no more time, so the talks could finish very soon.
The latest round of talks continued till midnight at the time of filing of this story. When this scribe sent out questions to top officials, they said that talks were going on till 12.40am Saturday.
