IMF seventh review likely to conclude next week

The ongoing seventh review of Pakistan’s economy under the $6 billion Extended Fund Facility (EFF) program is likely to conclude next week.

Sources said that the Pakistani team on Wednesday gave the clarifications to the International Monetary Fund (IMF) on the Prime Minister’s relief package as well as the industrial package.

The Pakistani team has reportedly dubbed the industrial package an investment scheme as they believe that investment will come into Pakistan through this scheme.

On the other hand, sources said that the IMF team objected to this package stating that its objectives are like an amnesty scheme.

A former tax official said that although the IMF always objected to the amnesty schemes, this package is a little bit different. The investor has to pay 5 per cent tax if they want to establish new industrial unity.

Such kind of investment packages were announced in the past but it has not attracted any investment, a former tax official added.

Sources said that Pakistan explained to the IMF that it does not have any mechanism for providing targeted subsidies on petroleum products so therefore announced the un-targeted subsidy. 

When some kind of mechanism develops then the government can announce the targeted subsidy on petroleum products, sources added.

The Prime Minister’s relief package was needed as countries like France also announced subsidies on petroleum products, sources added.

Sources said that the IMF team shared some further questions with regard to financing as well as the amnesty scheme with the Pakistani side and also said that they will meet on Friday.

It is pertinent to note that three rounds of policy-level talks have been held virtually between Pakistan and IMF.

The finance minister in a media briefing a few days ago said that the prime minister’s relief package would not have any fiscal impact or increase borrowing.

It is worth mentioning here that Pakistan and the IMF started negotiations on the ongoing seventh review of the $6 billion EFF program on March 4, 2022.