Aurangzeb is aiming at expanded long-term deal as IMF team arrives for last SBA review
Business
Talks about boosting tax collection and expediting privatisation
ISLAMABAD (Web Desk/Dunya News) – Finance Minister Muhammad Aurangzeb, who had earlier described a new deal with the IMF (International Monetary Fund) essential for Pakistan’s economy, said the government would aim at a longer and larger programme with the world’s top lender.
Aurangzeb said expanding the IMF programme through climate financing and jacking up the size of allocated quota under the EFF (Extended Fund Facility) would be goal during the upcoming negotiations with the IMF review mission.
The statement comes as an IMF mission is set to start the last review of the Stand-By Arrangement (SBA) from tomorrow (Thursday), which will pave the way for disbursement of the remaining $1.1 billion as the existing deal is going to expire on March 31.
In this connection, the finance ministry says Pakistan had met all the targets set under the deal negotiated with the IMF. “This would be a final review of SBA, and staff-level agreement is expected after this appraisal,” it said.
“Once a staff-level agreement is reached, the final tranche of $1.1 billion will be disbursed, following the approval of Executive Board of IMF,” the ministry added.
However, it is widely believed discussions would also be held on the future assistance as Islamabad needs the IMF assistance to meet long-term financing needs, which is going to require meeting all the tough conditions fully on subjects like energy price hikes and privatisation of lossmaking state-owned enterprises besides further reduction in subsidies.
During a media briefing on Tuesday, the finance minister said Islamabad will be "very keen to start discussions on another EFF with them during these talks," adding that further negotiations on the larger, longer programme would be taken forward on the sidelines of the IMF and World Bank's spring meetings in April in Washington.
Aurangzeb listed inflation as the biggest challenge for masses. But he repeated the same stance that macroeconomic stability would help arresting the trend gradually – a promise that hasn’t been fulfilled despite taking all the steps suggested by the IMF.
He also talked about interest rate cuts, but added that the subject falls within the State Bank of Pakistan (SBP) domain, which currently enjoys complete autonomy.
Read more: Interest rates continue creating fissures between governments and central banks
The newly-appointed federal minister also talked about the plans to expedite the privatisation process and expressed his confidence that the IMF would release the last tranche of $1.1 billion under the existing plan.
Aurangzeb, at the same time, highlighted the importance of starting talks to clinch another IMF programme at the earliest and mentioned the steps to be taken for enhancing revenue collection – the main focus and demand of the Washington-based lender.
He said the government would soon move towards to fully realising the potential of taxing the wholesale businesses, real estate and agriculture.
