ISLAMABAD (Ahmed Mughal):- The Govt of Pakistan said on Friday that there is no need to renegotiate IMF Program as it is on right track.
The statement comes amid when IMF announced that its high level delegation to visit Pakistan from next week. The delegation will look the reasons on the bases budget deficit reach 8.9 percent against the target of 7.2 percent.
The Ministry of Finance has maintained that while targets under IMF program are ambitious, there is no need to renegotiate.
The progress on nearly all the performance and structural benchmarks during Q1 FY20 is encouraging. Finance ministry is fully committed along with the IMF towards the ongoing reforms program.
The country’s Finance Ministry issued a statement and defend the deteriorated economic performance.
“The Finance ministry is fully committed along with the IMF towards the ongoing reforms program. The reforms program has 7 performance criteria, 5 indicative targets. The 13 structural benchmarks and the progress on all of them is very encouraging,” says a statement issued here today.
It also said that deteriorated outcomes were due to slowdown in growth. Currency depreciation and policy rate, oil prices, escalation on Pak-India border also contributed to escalate the situation.
The SBP has taken a policy direction in FY19 to correct the large trade deficit and shore up FX reserves. These measures have helped to reduce the Current Account deficit (CAD) to $13.5bn from $19.9bn in FY18. However, the rise in interest rates and a weaker Rupee have increased government’s debt servicing costs. These contributed Rs 104bn to the overall slippage. The currency devaluation eroded profits of the SBP for FY19 with a shortfall of Rs 135bn in non-tax revenue.
The litigation of telecom’s renewal of the 3G/4G licenses gave also shortfall of Rs 80bn during last fiscal year. Federal government also faced a shortfall of Rs 85bn from interest receipts from PSEs (NHA, WAPDA etc)
FBR tax revenues shortfall of Rs 321bn was the single biggest reason for the increase in the fiscal deficit. The fall in imports also contributed in the huge shortfall in tax revenue. The decision of the government to shield domestic consumers from rising oil prices resulted in over Rs 100bn shortfall in GST collection.
The fiscal year closed with 8.9% budget deficit, indicating a slippage of Rs 686bn.
It would have led to further slowdown in GDP growth if the government had decided to curtail expenditures further. This act would have caused a hard landing for the economy.
The attack on Pakistan by Indian forces and the standoff at the border has also escalated in expenditures. These expenditures were also necessary to ensure safety of citizens, said the statement.
The IMF delegation is arriving Islamabad, Pakistan from 16 Sept to look the serious matter. The delegation will stay 5 days in Pakistan and will meet with the high-ups of Pakistan. Mr Jihad Azour, Director of the IMF Middle East and Central Asia Department will lead the deletion in Paksitan. Pakistani officials will apprise the delegation about the results of last fiscal year and future plans.
The delegation also will meet with the Law Makers of the Standing Committee on Power of National Assembly.
It is important to mention here that Pakistan had secured IMF program worth of $6 billion in May, 2019. Pakistan has also received one billion dollar