ISLAMABAD: Owing to the deteriorated fiscal appearance of the economy, the International Monetary Fund (IMF) has resolved to send its Save Our Soul (SOS) mission to Pakistan in the current month for proposing policies and methods to halt the colossal budget deficit.
The International Monetary Fund (IMF) squad will review financial issues with a particular focus to reduce the target of prime deficit within the aspired limits. Pakistan has primarily delayed option of renegotiating objectives envisioned under the IMF programme; in the circumstances of surfacing new actualities on the fiscal front as the FBR’s periodically target has been demanded to revise downward from Rs1.071 trillion to more than 1 trillion rupees for the end September 2019.
On Wednesday night, a video convention held between Pakistan and the IMF team in which the IMF team revealed its grave concerns over the acute rise in the budget deficit in the last financial year. The budget confirmed all prognostications wrong that was made by the IMF and Finance Ministry at the time of negotiating the IMF deal of $6 billion.
The International Monetary Fund (IMF) team will carry a team visit to Pakistan from September 16 to September 20. IMF Chief in Pakistan, Teresa DabánSanchez, authenticated to The Private News channel on Thursday night. “An INF technical team is scheduled to visit Pakistan after Ashura Moharram probably from September 17 for staying here for 10 days,” as per the official sources.
The IMF’s review was supposed to be held in November 2019 but the choice of sending this technical mission recommends that the IMF is not satisfied with extensive mistakes of Pakistan on the financial front.
The financial objectives particularly central deficit has misaligned extremely as the IMF has set the requirement to take down the central deficit from 1.8 per cent of GDP to 0.6 per cent of GDP in the ongoing financial year. Currently, the primary shortfall had advanced up to 3.6 per cent of GDP.
“Yes, an IMF technical mission is coming to Pakistan within this month”, established top authoritative sources while talking to the private newspaper on Thursday. The sources stated that the forthcoming technical mission will be rendering assistance to the Ministry of Finance and other ministries/departments. Besides, the mission will devise an effective strategy to fight economic crises.
The IMF team probed about the causes for escalation in the budget deficit as Pakistan and IMF had predicted in April 2019 that the budget deficit may touch 7.2 per cent of GDP for the last financial year 2018-19 hence this prediction became the foundation of the IMF programme with the primary deficit predicted at 1.8 per cent of GDP.
“When the basis of IMF programme has shaken what is the guarantee that the envisaged targets for the current fiscal year will be materialised”, the IMF team asked the question. Pakistani squad demonstrated that the FBR faced shortfall due to a mixture of policy problems and slowness of the economy.
On the non-tax revenue aspect, they said that the restoration of licences of mobile operatives could not be developed in the last financial year but presently Rs70 billion has been collected.
Moreover, two RLNG plants could not be traded and they were confident that this transaction would be performed in the first six months of the ongoing financial year. The SBP earnings dropped due to devaluation. All these adverse advancements led to the hike of the budget deficit.
Indeed, Pakistan is going through a hard phase, the upcoming FATF meeting is also a challenge for Pakistan to counter.