ISLAMABAD: Finance Minister Dr. Shamshad Akhtar ruled out the possibility of Pakistan requesting an increase in the time frame or size of the Standby Arrangement (SBA) from the International Monetary Fund (IMF), while senior government officials Officials will also advise on bridging external financing gaps. Once a successful review was completed, The News reported Thursday.
Following his arrival in Pakistan on November 2, fund officials are in talks with Islamabad to sign a staff-level agreement under the $3 billion SBA program. These negotiations will end on the 15th of this month.
The IMF and Pakistan delegations to the talks were led by Finance Minister and the lender’s chief of mission Nathan Porter, who also held one-on-one meetings during the week.
The News asked Dr. Akhtar whether Pakistan is likely to request the IMF to extend the SBA program from March to June 2024 and increase it from the current $3 billion to $3.5 to $4 billion, the minister said. Answered categorically, “No”.
Responding to another question regarding the external financial gap, the minister said that she would advise after the review.
Another official familiar with ongoing talks with the IMF said the program’s loans from multilateral lenders including the World Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank, and the Islamic Development Bank (ISDB). was linked to its successful ongoing review. IMF program
The IMF has estimated that Pakistan needs total external financing of a little over $29 billion, including external debt of $24.5 billion and a current account deficit of $4.5 billion. Now that Pakistan is expecting $11 billion in deposits and commercial refinancing from bilateral friends, Islamabad will have to get $18 billion in external loans this fiscal year provided all other dollar inflow targets like exports, remittances are met. Foreign direct investment should be met. to the imagined mark.
There are some serious risks in the flow of debt dollars, including $5 billion in commercial debt, $1.5 billion through the issuance of international bonds, and $500 to $750 million of the $1 billion through ITFC.
If global interest rates come down, especially in the US, and oil prices fall in the international market, Islamabad will be able to secure breathing space, otherwise its external financial crisis could become a serious threat.
Independent economists are predicting that the external financing gap for the current fiscal year could be around $6-7 billion. This is the most serious threat to the stability of the economy and exchange rate.
On the financial front, sources said, top officials of IMF and FBR discussed tax administration, tax policy, tax administration, documentation/digitisation, structural changes in track and trace system and major revenue spinner sectors including sugar, tobacco. So discussed its implementation. , cement, and others. So far, the FBR’s annual tax collection target of Rs 9415 billion has remained unchanged during technical level discussions between the two sides.
In the energy sector, the IMF has raised questions over the delayed increase in gas tariffs from November 2023 against a commitment with the fund to increase it from July 1, 2023. 2024.
Official sources in the power sector told the IMF that the government released subsidy amount of about Rs 70 billion in the first week of October 2023. Quarterly (July-September) period against the total allocation of Rs 1,064 billion for the entire financial year 2023-24.
The losses of power sector distribution companies were estimated at 589 billion rupees, out of which 200 billion rupees could not be recovered. In this way, the remaining 389 billion rupees can be recovered and so far the government has recovered about 50 billion rupees by launching the anti-theft campaign. If this action against theft continues for the rest of the period, the overall recovery of electricity bills of electricity distribution companies can be improved by 200 to 250 billion rupees so that annual losses can be reduced by 50 to 60 percent. .
“We expect that 50 to 60 per cent of the total Rs 589 billion stolen power could be recovered during the current financial year,” the top official said.