IMF concerned over expected change of face in FBR

–Officials say ‘change in FBR admin may further reduce revenue collection’

–IMF delegates not happy with delay in appointments of financial advisers for sale of listed public entities

ISLAMABAD: As the government is reportedly looking for the next chairman of Federal Board of Revenue (FBR) after Shabbar Zaidi went on “an indefinite leave” due to health issues, the visiting team of International Monetary Fund (IMF) has reportedly raised its concerns over the change of face in the revenue board.

On Monday, the first day of IMF delegation in Pakistan, two meetings were held at the FBR and Ministry of Finance. In the introductory session of the first phase of talks, the IMF delegation met Adviser to PM on Finance Dr Abdul Hafeez Sheikh, State Bank of Pakistan Governor Reza Baqir and Acting FBR Chairperson Nosheen Javed.

According to details, the IMF officials feared a further fall in revenue collection as a result of major change in the FBR administration, as Shabbar Zaidi was “performing well in terms of increasing revenue and introducing reforms”.

As per the sources, the delegates said that the IMF was pinning its hopes on Shabbar Zaidi to meet the ambitious revenue target for the fiscal year 2019-2020.

The IMF officials also expressed their concerns over not taking them into confidence on any transition in FBR which may affect the entire momentum of tax collection, sources added.

Although the existing FBR chairman has gone on leave on medical grounds, the reasons have not convinced many in the Finance Division.

“The interference of Dr Abdul Hafeez Shaikh in FBR’s affairs and his behaviour during a recent meeting at FBR had made Zaidi highly dejected. The reshuffling of customs’ officers by the finance secretary without taking Zaidi into confidence was also one of the reasons which forced the chairman to part his way with the board,” claimed an FBR official on the condition of anonymity.

Apart from issues related to FBR, the visiting IMF team also asked the Ministry of Finance about the expected mini-budget, as reports in media related to the supplementary budget “had surprised the Fund”.

The IMF team was surprised to know that the preparation related to the mini-budget was at an advanced stage, as the law ministry was already consulted for the same, insiders claimed.

They said the IMF delegation was also not satisfied over the privatization process, noting that the government was yet to appoint liquidators and financial advisers for sale of listed public entities. As per agreed terms, financial advisers should have been appointed by the start of the second review of the IMF programme.

The Fund, however, was quite satisfied over the performance of the government on the external side, especially the position of reserves at the State Bank of Pakistan.

Talking to media persons after the meeting in Islamabad, the finance adviser said his government has taken prudent measures to control inflation, adding that Pakistani rupee has stabilized, whereas funding for the Ehsas Kifalat programme has doubled.

“In order to control inflation, the government did not borrow money from SBP, besides minimizing budget deficit by reducing unnecessary expenditures.”

Urging the provinces to play their role in controlling inflation, he said that hoarding and profiteering issues must be resolved through administrative measures.

To a question, he said that the prices of food items that of fresh vegetables increased due to seasonal changes and hoped that the prices would come down in days to come.

The adviser said that due to peace and stability in the country, investors from across the world were coming to Pakistan as they wanted to avail huge opportunities offered by the country.

The IMF staff team is currently in Pakistan to evaluate the implementation of economic targets agreed by Pakistan under the $6-billion Extended Fund Facility.

On the completion of the first review of Pakistan’s economic performance in December 2019, the IMF had acknowledged that Pakistan’s reform programme was on track and already producing results.