ISLAMABAD: Pakistan and the International Monetary Fund (IMF) will start Article 4 consultations in Dubai from today (Tuesday) and Islamabad will give a detailed briefing on the economic situation in the country to the Fund.
The talks will continue from March 28 to April 5 in Dubai. IMF officials had refused to visit Pakistan for talks due to the law and order situation in the country. However, later, both sides agreed to hold discussions in Dubai, as happened in last three years when Pakistan was under extended fund facility programme.
Pakistan had said goodbye to the IMF last year after completing three years extended fund facility programme worth $6.64 billion. However, every member country of the IMF, including Pakistan, need clean chit from the Fund on the economic situation of the country every year. Pakistan would be in better situation for getting loans from the World Bank, Asian Development Bank and other international financial institutions if IMF shows satisfaction on Islamabad’s economic situation. The government would inform the Fund of the recent economic situation in the country. Similarly, the economic team of the government would discuss the budget for the next financial year 2017-18.
The government is struggling to achieve the targets, which were set with the IMF during extended fund facility talks. The government is unlikely to achieve the target of restricting the budget deficit to 3.8 percent of the GDP (Rs1.276 trillion) during current fiscal year. Pakistan’s budget deficit had reached Rs799.1 billion (2.4 percent of the GDP) during first half of the year 2016-17 due to massive expenditure and low tax collection.
The government is also struggling to maintain the current account deficit during current financial year. The current account deficit had widened by more than 120 per cent to $5.4 billion in July-February of the ongoing financial year 2016-17.
Similarly, the shortfall in tax collection has increased to Rs150 billion in just eight months as the Federal Board of Revenue (FBR) has so far provisionally collected Rs1.91 trillion in the current fiscal year.
However, the government has so far restricted the inflation below the target of six percent, which was set for the current fiscal year 2016-17. Inflation has gone up by 3.9 percent during first eight months (July-February) of the ongoing financial year over a year ago.
Meanwhile, Finance Minister Ishaq Dar chaired a meeting here on Monday to review the economic indicators as well as progress on various economic reforms, in the context of Article – IV consultations between the Government of Pakistan and the IMF scheduled to commence in Dubai on March 28. The finance minister will join the Pakistan delegation later to participate in the final stage of the consultations.
The finance secretary briefed the meeting about preparations for the week-long consultations. He also provided an update on measures undertaken for strengthening the reforms process.
The finance minister expressed the hope that the two sides would have a constructive round of discussions as had been the case during the preceding quarterly review meetings. He urged that the progress Pakistan had achieved in the sphere of economic reforms should be fully projected during the consultations. He said that the reforms had enabled the country to achieve macro-economic stability, and the implementation of key structural reforms needed to be continued in order to foster higher, more inclusive and sustainable economic growth.
It may be recalled that the IMF Executive Board completed the 12th and final review of an Extended Fund Facility (EFF) programme for Pakistan last September, which led to disbursement of the final tranche. IMF’s close engagement with Pakistan was continuing through policy dialogue in the context of regular consultations and post-programme monitoring. During the consultations in Dubai, a detailed review of reforms carried out by Pakistan in different areas of the economy, particularly the energy sector, would be undertaken.
The meeting was attended by senior officials of the Ministry of Finance, Ministry of Water and Power, Ministry of Petroleum and Natural Resources, Aviation Division, FBR and the Privatisation Commission.
