Sixth review deferred on Pakistan's call, says IMF

• Sources say IMF's Executive Board doesn't have Pakistan's case for completion of 6th review and release of $1 billion on this year's calendar anymore.
• Interesting stage about to begin as Parliament will have to initiate a debate on amended finance and SBP's autonomy bills.
• IMF only has Nepal's request under Extended Credit Facility on January 12, 2022 under consideration.
  

ISLAMABAD: Following a request from the Pakistani authorities, the Executive Board of the International Monetary Fund (IMF) has deferred consideration of the completion of the sixth review and release of a $1 billion tranche under the Extended Fund Facility (EFF), just days ahead of the date for which it was scheduled, The News reported.

The Ministry of Finance had issued a statement stating that the IMF's Executive Board was requested to defer the consideration of the sixth review.

The meeting was meant to take place this week on January 12 to review the recommendation to release US$1 billion of Pakistan's US$6 billion, three-year programme. However, Pakistan has been so far been unable to pass recommended fiscal tightening measures tied to the funds' release.

The government has introduced both the amended finance and SBP's autonomy bills in the National Assembly, the finance ministry statement said, adding that as soon as the legislative procedures are completed, the IMF board will consider it for approvaI.

This week marks the start of an interesting stage in this process when Parliament will have to initiate a debate on the amended finance and SBP's autonomy bills and it is yet to be seen how both Houses of Parliament stamp their approval on the controversial State Bank of Pakistan Amendment Bill 2021.

Top official sources said that the IMF's Executive Board has taken out Pakistan's case for completion of the sixth review, scheduled for January 12, 2022, and release of $1 billion under the EFF programme from this year's calendar and now, only Nepal's request under the Extended Credit Facility on January 12, 2022 will be under its consideration.

When contacted about the exact date for consideration of Pakistan’s request by the IMF's Executive Board, IMF Resident Chief in Pakistan Esther Perez Ruiz, replied: "The Board meeting for consideration and eventual approval of the sixth review under the EFF is being postponed at the request of the authorities. The new date is yet to be determined."

Now Pakistani authorities say that the IMF’s Executive Board was expected to meet by the end of January 2022 or early February 2022 to consider Pakistan’s request for completion of the sixth review and release of $1 billion tranche under the EFF program.

The Ministry of Finance thinks that the Tax Laws Supplementary bill was expected to be approved probably next week from the National Assembly. However, the SBP’s Amendment Bill may take time because it requires approval from both Houses of Parliament, so the treasury benches will have to devise an effective strategy to get smooth sailing for its approval.

The Pakistani side argued that the IMF’s staff had placed two conditions, including seeking approval of Parliament on two key bills, including Tax Laws Supplementary Bill and the second, State Bank of Pakistan (SBP) Amendment Bill 2021.

The government had introduced these two bills before Parliament and currently, the Upper House of Parliament (Senate) is finalising its recommendations on the so-called mini-budget, known as Tax Laws Supplementary Bill 2021, under which the government proposed withdrawal of GST exemptions, jacking up tax on vehicles registration, increasing withholding tax on mobile users from 10 to 15 percent and some other administrative changes and promised to collect tax revenues to the tune of Rs343 billion on per annum basis.

However, independent economists estimate that the withdrawal of GST exemptions and other measures through the Tax Laws Supplementary Bill, if approved by the Parliament in its existing shape, could hardly fetch Rs200 billion maximum, so it was yet to be seen how much the IMF staff had estimated revenues with the help of withdrawal of GST exemptions and other taxation measures.

The parliament has not yet kick-started its deliberations on the controversial SBP Amendment Bill 2021 because many independent economists and analysts suggested that it required major reviews, changes and only then it could be approved. Otherwise, the government might have to face stiff resistance, especially from the opposition benches.