ISLAMABAD: International Monetary Fund delegation will arrive in Islamabad on Monday to review the country’s economic progress and suggest ways to curtail the burgeoning budget deficit crisis.

The fund has expressed its concerns over Pakistan’s economic performance in the first two months of signing the $6 bn loan program.

The IMF delegation will be headed by the international body’s Middle East and Central Asia Department Director, Jihad Azour.

The visiting experts are likely to hold a consultation on energy reforms and review the reasons behind the government’s failure to achieve the Rs648 bn tax target.

The country’s Ministry of Finance on Friday categorically refuted reports of any renegotiation of IMF targets.

However, Dr. Ashfaque Hassan Khan, member of the government’s Economic Advisory Council, told Arab News on Sunday that Pakistan would have to consider ground realities and try to renegotiate some of its economic targets with the Fund.

The international financial institution announced a $6 billion bailout package for Pakistan after months of negotiations in May this year. The Fund also announced in its official statement that the money would be dispersed over a period of 39 months.

Even while it was faced with a difficult balance-of-payments crisis, Pakistan did not readily agree to the IMF terms and conditions and took its time to negotiate with the lending organization. 

However, Khan, a leading economist, believes the targets set in the bailout program “were grossly unrealistic” and “no one can achieve them” in the present economic environment.

His comment came days after the IMF spokesperson, Gerry Rice, said that Pakistan needed to mobilize domestic tax revenue to fund the “much need” social and development spending while simultaneously keeping its debt on a “firm downward trend.”

According to Dr. Vaqar Ahmed, the deputy executive director of Sustainable Development Policy Institute, IMF’s concerns “were expected because the Federal Board of Revenue [FBR] is certainly struggling to meet the targets [set by the global lender].”

“The FBR devised a new [tax and revenue] system to achieve the Rs. 5.5 trillion targets. But capacity gaps here are preventing the country from achieving the target,” Ahmed told Arab News.

“There were shortfalls in previous months which are large because of the ongoing negotiations with the trader community, with people belonging to wholesale and retail trade, and there are some businesses who owe large taxes but have gone to court and taken stay orders. Until the negotiations and stay orders do not end, it will be difficult for the FBR to achieve its targets,” he added.

Analyzing the situation, Dr. Khurrum Husain, an economic affairs expert, said: “There are two targets, in particular, Pakistan has to focus on Net International Reserves [NIR] and tax collection.”

“Pakistan’s NIR is currently negative which has to be brought into the positive territory by building the [foreign] reserves,” one of several key points of the IMF program.

“We will know by the end of September if we are achieving that NIR target when the quarter ends,” he continued.

Husain noted that the country was slightly behind the tax and revenue target, though he added: “Is Pakistan so far behind that it would cast a shadow over the program and declare an emergency? I don’t think that’s the case at the moment.”

However, Moody’s credit agency on Friday presented a grim economic forecast, placing Pakistan among the countries that could face serious financing issues.

“Moody’s assessment is largely forward-looking and it is based on the fact that Pakistan is supposed to repay some of its debts in the coming days. This implies that the country could face a financial liquidity shortage,” Khan said.

“The government has been working on two or three approaches to avoid that shortage,” he added. “It is approaching other multilateral partners like the World Bank and the Asian Development Bank to expedite the dollar-based approach at lending. Pakistan is also trying to reach those lenders to whom it owes money so that the debt can be rescheduled and its maturity can be extended.”

Discussing what the country should expect during the upcoming visit of the IMF delegation, Khan said: “Pakistan is likely to get a reminder from the IMF of the commitments it has made under the program. The country will try to impress upon the visiting team of the difficulties and request for relaxation on some of the targets. However, our economic managers have little leverage at this point to negotiate with the IMF.”