ISLAMABAD: The upcoming bailout package of International Monetary Fund (IMF) for Pakistan to the tune of $5.3 billion depends upon performance of Federal Board of Revenue (FBR) as well as cash-bleeding power sector.
The much-awaited energy policy, going to be unveiled by Prime Minister Nawaz Sharif, will set the tone for moving towards fixing the problem of power sector as its actual losses were standing in the range of $7.5 billion to $8 billion in last financial year.
“The Ministry of Water and Power has moved a summary before the Economic Coordination Committee of the cabinet for getting approval on four to five key points including raising power tariff as well as amending the NEPRA act, which will require approval of the Parliament,” said the officials of Finance Ministry.
There are many doubts starting shrouding on the economic horizon that why the PML (N) was dillydallying unveiling of energy policy. In the wake of delay in prior actions implementation, it was extending wrong signal to the market as the currency market witnessed surged and rupee reached upto 103 against one US dollar.
“When we have agreed with the IMF on certain conditions then why there is delay on implementation,” said top sources. But official circles say that they conducted meeting on daily basis to track down implementation status on prior actions agreed with the IMF to ensure compliance in timely manner before September 4, 2013. Without fixing the problems of taxation and power sector, the international financial institutions (IFIs) are not ready to provide multibillion dollar assistance to rescue Pakistan’s ailing economy.
The IMF’s executive board, scheduled to meet on September 4 at Washington D.C will consider Pakistan’s case including possibility of jacking up Islamabad’s request from $5.3 billion (348 percent quota of the country) to $7.3 billion or 500 percent quota but the PML (N) led government would have to implement prior actions till before the due date of early next month including raising electricity tariff, obtaining approval of Council of Common Interest (CCI) for evolving consensus among the provinces for posting revenue surplus and FBR’s action for broadening the narrowed tax base.
In the wake of growing political polarization, it will be quite hard for the N government to take Sindh and KPK government on board in terms of getting approval of CCI on revenue surplus given by the provinces in the aftermath of 7th NFC Award.
However, the sources said that assuming all prior actions were completed within the stipulated timeframe — something that we cannot take for granted — and the program is viewed as being good enough to warrant Fund support, and assuming our Office of the Executive Director in the Fund does a good job lobbying with senior management and other Executive Directors, we may get something extra.
The second important prior action is taking measures for broadening of narrowed tax base. The FBR has prepared an enforcement plan and will target potential tax evaders in the current fiscal year.
To achieve the desired target of Rs 2475 billion in the current financial year, the FBR would have to bring new taxpayers into net otherwise another major shortfall would be waiting for tax machinery going to cause derailment of the IMF program half way as the country is being known as one tranche country in the comity of nations.
