ISLAMABAD: Pakistani authorities on Tuesday requested the International Monetary Fund (IMF) to reduce the country’s revenue collection target by around Rs300 billion amid ongoing negotiations over Pakistan’s bailout program, an official told Arab News.
On Monday, IMF representatives arrived in Islamabad for the second review of the $6 billion loan program ahead of the disbursement of another installment of about $450 million in March. Pakistan has so far secured $1.44 billion under the bailout scheme since July 2019.
The Pakistani authorities have asked the IMF team to relax the revenue target by around Rs300 billion as the national tax collection agency is struggling to meet its goals, the official familiar with the matter told Arab News on condition of anonymity.
The fund has already reduced the collection target from Rs5.5 trillion to Rs5.24 trillion and if it agrees for further cuts, the target would be below the Rs5 trillion mark.
The talks are taking place amid a slowdown in Pakistan’s economy, which is expected to grow by only 2.4 percent, according to IMF predictions.
Economists argue that even if the target is decreased, the tax authorities will not be able to meet it as they are unlikely to collect more than Rs4.4 trillion. “Setting the Rs5.5 trillion target was unrealistic and uneconomic. How will you achieve such a huge target when your economy is growing at 2.4 percent?” Dr. Ashfaque Hassan Khan, a member of the Economic Advisory Council (EAC) argued.
“In a bid to achieve this unrealistic target, the authorities have shaken the country’s industrial sector,” he said.
During a meeting with the National Assembly’s Standing Committee on Finance, Revenue, and Economic Affairs on Tuesday, traders and industrialists said they were unable to continue their business activities and warned that their sectors were on the verge of collapsing due to an increase in energy rates and taxes.
Since many of them believe the energy and tax hikes have been imposed to meet the IMF’s requirement, the standing committee’s chairman, Faizaullah Kamoka, told Arab News that they will meet with the IMF delegates on Feb. 12.
Kamoka also dispelled as “speculation” the impression that the government was mulling a mini-budget.
Another area of concern with regard to Pakistan’s bailout program is its insufficient progress on the privatization front. The privatization process of state-owned entities would add to the country’s revenue collection.
Meanwhile, the Cabinet Committee on Privatization (CCoP) on Tuesday allowed open auction bidding for 27 land assets owned by federal government entities in pursuance of a cabinet decision to dispose of unproductive state lands and assets.
“Earlier, the CCoP discussed the issue in detail and approved the recommendations of the Transaction Committee, Inter-Ministerial Committee and Privatization Commission Board for an open auction bidding procedure and total reserve price of Rs6.62 billion for 27 properties belonging to different federal government divisions and entities,” the Ministry of Finance said in a statement.
The bidding process for the 27 properties is expected to be completed by the end of April.
