Pakistan, IMF mull over keeping petroleum levy up to meet revenue target.

ISLAMABAD -- Pakistan and the International Monetary Fund (IMF) on Tuesday explored the possibilities to increase the non-tax revenue mainly by keeping the petroleum levy on the higher side in order to compensate for an expected reduction in the revenue shortfall, reported media.

The finalisation of such fiscal arrangement can pave the way for evolving consensus on striking a staff-level agreement at the conclusion of parleys on February 13. Pakistan desires pitching the Federal Bureau of Revenue's (FBR) revised target in the range of slightly over Rs4.8 trillion against the earlier revised target of Rs5.238 trillion. If the Fund agrees, then the non-tax revenue will be further jacked up.

The only immediate option is to keep the levy on the higher side for all petroleum products at a time when oil prices are falling after the end of US-Iran tensions as well as eruption of coronavirus in China.

The IMF and European Commission had projected that the expected oil prices on the international market would be ranging from $56 to $58 per barrel for 2020-21. With the expected average price ranging around $55 per barrel for the remaining period of the current fiscal, the easy windfall could only be earned by keeping the petroleum levy on the higher side and not passing the benefit of a cut in the oil prices on to the consumers with immediate effect.

With increased revenues, the government will be in a better position to utilize resources for provision of direct subsidy to the poorest of the poor through the ration cards and Utility Stores Corporation (USC).

The Federal Cabinet has earmarked Rs10 billion for providing subsidy through the USC during a recent meeting held under the chairmanship of Prime Minister Imran Khan here on Tuesday.

The visiting IMF mission also met with three renowned economists of Pakistan Dr Rashid Amjad, Sakib Sherani and Dr Abid Suleri in a meeting that continued for more than two hours.

The economists have recommended to IMF that it was not feasible politically and economically for the government to come up with a mini-budget with...