IMF Points Out Concerns In Implementing $7 Billion Loan Package In Pakistan, Here’s What The Global Body Said

The global lender said that the country’s tax shortfall and delay in materialising foreign loans are the primary obstacles to implementing the loan, along with other factors

The IMF highlighted flaws in the implementation of the National Fiscal Pact signed by all five provincial finance ministers to match the income tax rates and shift some expenditure responsibilites to the provinces.

Source : United Nations

The IMF pointed out multiple challenges in implementing the $7 billion loan package in Pakistan. The global lender said that the country’s tax shortfall and delay in materialising foreign loans are the primary obstacles to implementing the loan, along with other factors.

The International Monetary Fund (IMF) mission held detailed meetings with Pakistan officials for five days on executing the conditions attached with the loan and expressed worries regarding the new agriculture income tax law in the country, reported PTI.

The law is still not completely aligned with the legislation and deviates from the National Fiscal Act, reported The Express Tribune. Citing a source, the report stated that the global body pointed out two major concerns on Friday, namely, the underperformance of the Federal Board of Revenue (FBR) and a delay in finalising loans to fill the gap of $2.5 billion.

The IMF asked the country to contact Riyadh to secure oil on deferred payments and call on Beijing to reschedule debt. Further, the body said that it was concerned about the delay in privatisation of the power distribution companies and reiterated that the Pakistan Sovereign Wealth Fund Act needs to be amended by December end.

The IMF highlighted flaws in the implementation of the National Fiscal Pact signed by all five provincial finance ministers to match the income tax rates and shift some expenditure responsibilites to the provinces.

However, Punjab Information Minister, Azma Bukhari, said no breach of the pact has occured and asserted that the newly amended provincial law addressed the requirements of the National Fiscal Pact.

“It's not in any breach. Even the IMF has read the amendments and is fine with them. If there is any breach then the IMF would have said that during the last two days' meetings,” the minister said.

Meanwhile, the report cited the source and stated, “In addition to Punjab, the Sindh government also violated the National Fiscal Pact as it did not show any serious intention to implement it during meetings with the IMF.”