Pakistan and IMF talks still at odds.

• Author: Kazmi, Shabbir

Byline: Shabbir Kazmi

Pakistan and the International Monetary Fund (IMF) are still talking about raising taxes and electricity tariff at the last leg of technical-level discussions to put US$6 billion Extended Fund Facility (EFF) back on track.

The virtual talks between the two sides on Friday were extended at the last moment for 8-10 hours as they struggled to narrow down their hard positions to a level that Finance Minister Shaukat Tarin could strike a deal during policy-level talks with the IMF management and mission chief next week.

The IMF staff had termed Pakistan's revenue growth 'unsustainable' as it could reverse as soon as policies to control imports are eased. Also, the power sector circular debt management plan was found to be 'un-bankable' without sufficient tariff increases. The IMF staff wanted major steps on both fronts.

These are the two critical issues where 'give and take' has to take place keeping in mind the economic conditions in the wake of uncertain Covid-19 situation and international commodity prices.

Tarin will hold another round of policy-level talks with Fund management next week; Finance Ministry challenges WB estimates of Pakistan's growth rate.

The IMF programme has been in recess since March this year owing to divergent views of the two sides.

Meanwhile, the Finance Ministry has challenged the World Bank estimates of Pakistan's growth rate at 3.5% during current fiscal year and last year.

The Bank in a report on Thursday said Pakistan's GDP growth was expected to ease to 3.4% in the current fiscal year, as both expansionary and monetary policy measures unwind.

"The World Bank estimates are based on unrealistic assessment," said the Finance Ministry, adding that the provisional estimate of GDP growth for FY21 was 3.94% based on 2.8% growth in agriculture, 3.6% in industry and 4.4% in services. However, LSM (large-scale manufacturing) growth was provisionally taken as 9.3% for estimating GDP growth at 3.94%.

LSM data is available with a two-month lag and the recent data released by the Pakistan Bureau of Statics (PBS) recorded LSM growth at 15.2% for FY21.

Furthermore, recent data on crops mentioned by the Federal Committee on Agriculture (FCA) suggests that production of important crops is higher than taken in National Accounts, 2021.

Wheat production is recorded at 27.5 million tons as compared to 27.3m tons, while that of maize is 8.9 million tons against 8.5 million tons as per the PBS data for estimating...