IMF mission arrives to review performance under bailout package.

Byline: Khaleeq Kiani

ISLAMABAD -- A staff mission of the International Monetary Fund (IMF) is in town for an 11-day second review of PakisAtan performance under the $6 billion bailout package signed in July last year amid a massive revenue shortfall in the first seven months of the current fiscal year.

The completion of the review against a significantly modified 39-month programme in November last year would determine if the government would secure disbursement in March of another tranche of about $450 million direly needed to build market confidence and foreign exchange reserves. Pakistan has so far secured about $1.44bn through an upfront release of about $991m in July and first installment of about $452m in December last year.

Of the total $6bn extended fund facility, Pakistan would actually receive net inflows of about $1.65bn until 2023 as it would be repaying about $4.36bn to the IMF during the same period.

The review is taking place at a time the government has suffered a revenue shortfall of about Rs385bn in the first seven months of the current fiscal against the target of Rs2.79 trillion. Under the federal budget 2019-20, the government has set an annual tax collection target of Rs5.503tr for the Federal Board of Revenue (FBR). This annual target is based on a revenue growth of 43 per cent, while the actual revenue collection growth over the first seven months has struggled at about 16.8pc, an apparent result of more than 14pc rate of inflation and 3pc economic growth claimed by the government.

The IMF staff had flagged in its quarterly review report in December the risks stemming from the composition of adjustment programme, with an important component from non-tax revenues to date, and 'cautioned that fiscal consolidation must be achieved on the back of high-quality measures to ensure the sustainability of the adjustment'. The revenue slippages have continued since then.

During its stay here until next weekend, the Fund mission would hold meetings with cabinet members, including Dr Abdul Hafeez Shaikh, Hammad Azhar, Omar Ayub Khan, Asad Umar and MohammadAmian Soomro, besides top officials of the State Bank of Pakistan and economic ministries. The focus of discussions would remain around progress and challenges on circular debt reduction, revenue collection, privatisation programme and other structural reforms.

The key challenge for the government at this stage is the limited space available in the...