ISLAMABAD: The visiting International Monetary Fund (IMF) team is starting talks on policy matters Monday (today) with the Pakistani officials after the two sides completed discussions on technical issues concerning various issues, especially the power and gas sectors.
During the policy-level talks, Pakistan may face tough demands as the IMF is fully focused on reducing the fiscal deficit and the external financing required to bridge the gap between the government income and expenditure.
A successful review – the first of the two under the $3 billion stand-by arrangement will result in the release of $710 million in second tranche in December (next month) – to be a followed by a similar exercise in February and March.
Caretaker Finance Minister Dr Shamshad Akhtar and IMF Mission Chief Nathan Porter will lead the sides during the latest phase of review that is scheduled to complete later this week on Wednesday (Nov 15).
Officials of the Special Investment Facilitation Council (SIFC) will brief the IMF delegation during policy-level talks on the matters related to the expected direct investment and the tax exemption, as the world’s top lender wants to expand the tax base for an increased revenue collection by removing the different concessions enjoyed by the business community.
At the same time, the Pakistani authorities from the finance minsitry and the FBR are going to share information with the IMF representatives on subjects are currency market and exchange rate as well as institutional reforms, privatisation and circular debt.
It is not just the government but also the businessmen and investors who are watching the progress made in the ongoing IMF review with a belief that inflation has started easing after reaching its peak and there won’t be any rate hikes in future.
However, there is a broad consensus that the interest rates, which have crippled the economy, aren’t going to slashed to the desired levels albeit one may see a rate cut after the next meeting of the State Bank of Pakistan’s Monetary Policy Committee.
Moreover, the government has already hiked the power and gas tariffs, a move meets one of the key IMF demands and addresses the circular debt issue.
At the same time, the investors are feeling that the privatisation of loss-making state-owned enterprises (SOEs) may gain momentum after years of stagnation, which will help the boosting the share prices of the stocks which are still undervalued when compared with the highs reached in 2017 despite the record-breaking surge being witnessed in the stock market.
