ISLAMABAD: A Week long technical talks between Pakistan and the International Monetary Fund (IMF) ended on Monday without building consensus on power sector subsidies and primary deficit.
Sources said that both sides will start discussion on policy level talks from Tomorrow (Tuesday) to finalize the Memorandum of Economic Policies Framework (MEFP) and they will try to sort out the pending issues.
Sources said that the Pakistani side could not convince the IMF team about curtailing the energy sector circular debt.
The Fund wanted the government to increase electricity tariff to overcome losses of DISCOs besides withdrawing Rs100 billion energy related subsidies to the export sector.
Sources said that the government has given assurance that it will withdraw Rs100 billion subsidies to the export sector, however provinces will be free to subsidize the export sector on their own.
Meanwhile, the government team has also assured the IMF that they shall make cuts in PSDP as well as increasing the electricity tariff to overcome energy sector circular debt.
On the other hand, the government team has also shared a plan with regard to reducing the circular debt of the oil and gas sector.
As per the plan, the government will make a cash injection in a single day worth Rs 543 billion to SSGC and SNGPL.
The government will pay Rs 241 billion to SSGC and Rs 302 billion to SNGPL.
The amount received by SSGC will further clear the circular of OGDCL. The SSGC will be able to repay Rs 154 billion loan to OGDCL and Rs87 billion to Govt Holdings pvt ltd, sources added.
In addition, SNGPL will pay Rs 172 billion to OGDCL, Rs 90 billion to PPL and Rs 40 billion to GHPL, sources added.
Sources said that IMF has also forecasted 0.9% primary deficit against the budgeted estimation of 0.5 percent during this year.
Sources added that the IMF team has also shown concerns over non implementation of Single Treasury Accounts as a number of departments still are operating accounts in private banks.
Sources also added that the IMF team remained committed to its demands with regard to increasing of GST from 17 to 18 percent GST on all goods with a point of view that one percent GST hike will help in collecting another Rs 39 billion, sources added.
The fund has also emphasized the Pakistani team not only for abolishment of income tax exemption but to impose Rs180 billion Flood levy to meet FBR’ revenue target.
Sources said that Finance Minister Ishaq Dar still sticks to not imposing sales tax on petroleum products as he thinks that a new wave of inflation will follow.
Sources said that the IMF agrees to subsidize energy related tariffs in the Kisan package as well as the Balochistan tube well scheme.
The government team will also give a roadmap for the privatization program during the policy talks, sources added.
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Its looks like over for Pakistan all industries going down, big comapnies are running away i dont know what this country government is doing.
Need of some sense for progress.
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