Power Minister Engineer Khurram Dastgir. Twitter


Power Minister Engineer Khurram Dastgir. Twitter  
  • Minister says IMF deal is near. 
  • Says agreement has been reached on almost all issues with lender. 
  • Says Fund seeks Pakistan to curtail its electricity’s line losses.

Power Minister Engineer Khurram Dastgir said that Pakistan was on the verge of sealing a deal with the International Monetary Fund (IMF) as consensus had been achieved on almost all issues between the two sides.

Pakistan — with a $350 billion economy — is seeking a crucial instalment of $1.1 billion from the IMF to avoid default. The Fund has worked out a larger gap of approximately Rs900 billion, equivalent to 1% of the gross domestic product (GDP) — a major stumbling block in striking a staff-level agreement.

The IMF has not demanded the government to slash its defense budget, the minister said, speaking in the Geo News programme ‘Capital Talk’ on Monday. “Instead, they [the IMF) sought the Energy Division to make its losses peter out.”

The IMF has also called upon the country to cut down line losses of electricity in the country’s northern, southern and western areas, Dastgir said.

The international lender has made it clear to Pakistan that the country would have to set its house in order amid the prevalent economic turmoil, he said, adding the country will have to enhance its tax revenues and reduce losses.

Dastgir said the international powers are not willing to show Pakistan lenience since the US withdrew from Afghanistan.

Things to remain tight for a while: Miftah

“Things will be tight for a while but we can get enough loans for now that we will get some room,” former finance minister Miftah Ismail said, while replying to a question asked by Geo.tv during a question and answer session held by the former financial czar on the popular microblogging site, Twitter, on Sunday.

Replying to a question regarding the economic damage caused due to the delay in the resumption of the bailout programme, Miftah, who was the PML-N’s finance minister before Ishaq Dar, said that Pakistan lost credibility in the eyes of international players, which is “very costly”.

The IMF team has been in Islamabad for the last few days for talks with the Pakistani authorities. Following the technical level negotiations between Pakistan and the IMF’s negotiation team led by Nathan Porter, the two sides will start the policy-level negotiations today. The lender has imposed strict conditions on Pakistan in various fields.

Yawning gap in fiscal framework

As per the Fund’s assessment, Pakistan faced a primary deficit gap of 0.9% of gross domestic product (GDP) equivalent to Rs800-850 billion mainly because of less tax and non-tax revenues and increased expenditures.

However, the Pakistani side did not accept such a fiscal gap, arguing that it was estimated to the tune of 0.5 to 0.6% of GDP in the range of Rs400 to Rs450 billion for the current fiscal year.

The Washington-based lender assessed that the Federal Board of Revenue of Pakistan (FBR) might face a shortfall of Rs130 billion in achieving the desired tax collection target of Rs7,470 billion.

The government and the IMF might agree to abolish the reduced electricity tariff for the export-oriented sector and link it with export proceeds.

The textile sector is selling 40% of its produced items in the domestic market, so it is wrong to get subsidies on power and gas tariffs on the whole production.

“Differences still persist over ascertaining the exact fiscal gap between Pakistan and the visiting IMF review mission during the technical levels talks. Once it’s finalised with the IMF, then the additional taxation measures will be firmed up, which will be unveiled through the upcoming mini-budget. In view this of a lack of reconciliation over the figure of fiscal gap, the technical level talks will continue on Monday and then policy level talks are expected to commence from Tuesday,” sources confirmed while talking to a select group of reporters in the background discussions on Saturday.

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