The visiting International Monetary Fund’s mission extended its stay in Pakistan, also asked Islamabad to reduce its trade and commercial dependence on Beijing and to seek other international options by signing free trade agreements ( FTA) with other countries.
This development comes as the mission extended its stay in Pakistan to make more efforts to reach a consensus on the manpower agreement, the two parties have so far persisted with respective differences on immediate measures to reduce the gap between revenue and expenditure.
According to the local media on Thursday night, the two sides were busy ironing out differences over income generation efforts as the FBR wants a further reduction in its revised target of Rs.5238 billion, but the IMF wants to see the plan to eliminate distortions and broaden the permanently narrowed tax base.
Without the reform plan, the IMF will not show any lenient attitude towards FBR’s inability to maximize its revenue efforts, said a senior official, citing the IMF team in their interaction. The IMF still insists that if the need arises, the government must take steps to correct the situation halfway instead of waiting for the next fiscal year.
Staff will find it difficult to defend their position if they agree to a further reduction in the FBR target, sources said. On the other hand, if the revised target of the FBR remains intact at 5,238 billion rupees, which the experts consider impossible to achieve in the given time.
Although, the Ministry of Finance and other officials claimed in their background discussions that there was no ‘deadlock’ and the staff-level agreement would be finalized anytime soon. But when they were asked to share details, they were non-committal saying that the talks were underway, so nothing could be stated with credence.
Second, the PTI government is opposed to raising electricity and gas prices for the next 12 to 18 months, as Prime Minister Imran Khan asked relevant ministries to freeze their tariffs for a period of time, but the IMF questions this wisdom, saying that liquidity bleeds losses will not be reduced if there is no cost recovery for energy utilities. “The IMF is calling for a viable alternative plan,” the sources said.
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