ISLAMABAD: Federal Board of Revenue (FBR) aptly resolved almost all the reservations and objections of the International Monetary Fund (IMF) in recently concluded talks for 10th review of Extended Fund Facility (EFF) programme.
Pakistan and the IMF concluded these talks on the third of the current month, February, in Dubai. FBR Strategic Planning, Reforms and Statistics Member Dr Muhammad Iqbal led a two-member team of the FBR in both technical and policy-level negotiations.
Sharing his experience in talks with Customs Today, Dr Iqbal was of the view that IMF team had some reservations about the FBR.
“IMF showed objection towards the recently announced Voluntary Tax Compliance Scheme amid fear that it would be used for whitening of black money,” he said, adding, “We made it clear to the IMF that the scheme would neither be used for tax amnesty nor for whitening of black money.”
“It will be a major tool in the hands of the FBR for widening the tax base by bringing more and more traders into the tax net,” he said, adding that with logical and rational arguments, IMF members were convinced of our point of view.
Moreover, Dr Muhammad Iqbal said that the IMF’s other objection was about possibility of achieving the revenue collection target by the FBR. “These reservations were based on reduced exports, lowered commodity and petroleum products’ prices and lower production of cotton, but we turned all reservations down by presenting full statistics before the IMF team, showing the increasing trend in the revenue collection during the last few months,” he said.
To a question about the environment of the talks, Dr Iqbal said that environment was quite friendly and cordial because the IMF representatives did not thrust any solution or option at us, as they just sought proposed option with practicable measures for the resolution of issues.
However, at some stages the environment became a little bit sour, but it was overcome amicably just because of the fact that neither side remained sticking up to its stance on any subject, he observed.
The talks were held in such a smooth way and all issues were resolved so amicably that FBR Chairman Nisar Muhammad Khan, who joined the talks later, did not have to face any burden or pressure during the talks, Dr Iqbal said, adding that it was just because of the fact that we had addressed almost every objection of the IMF team on almost all issues pertaining to the FBR.
He said that once the technical-level talks were over, the policy-level talks became easy for us. Therefore, after successfully conducting talks at both stages, we were able to give good news to our team of negotiators.
He said that the team of the FBR was optimistic about chances of successful talks on the basis of positive indicators related to our economy, like enhanced volume of foreign exchange reserves, confidence showed by international investment organisations in Pakistan as well as keen interests showed by China and other countries’ investors in recent investment conferences.
“We also presented positive and improved rating of Pakistan by the international financial institutions in our arguments,” he said, adding that Pakistan’s economy was held in high esteem by international rating agencies, and in fact Moody’s had already enhanced Pakistan’s economic outlook from stable to positive. He said that Pakistan’s continued struggle for elimination of terrorism and for peace and security would ultimately benefit the economy.
It is pertinent to note here that in February last year, the IMF conceded to Pakistan’s demand for downward revision of tax collection target by Rs 119 billion after the government failed to introduce much-needed reforms, as both the sides announced an agreement for the next loan tranche of $518 million under the Extended Fund Facility (EFF) programme without any special waivers.
An Extended Fund Facility with IMF provides assistance in support of comprehensive programmes that include policies of the scope and character required to correct structural imbalances over an extended period. It has a comparatively longer repayment period of four-and-a-half to 10 years, with repayments in 12 equal semi-annual instalments.
Pakistan entered into the programme with the IMF on September 4, 2013. It is a 36-month extended arrangement under the Extended Fund Facility (EFF) for $6.64 billion, 425 percent of quota). First tranche of $544.5 million, 34.8 percent of quota, became available on September 6, 2013, and the remainder would be evenly phased thereafter, subject to quarterly reviews.
