by Mehtab Haider in The News, Nov 13, 2020
ISLAMABAD: The IMF is all set to convert all missed structural benchmarks such as tabling bills for amendments into State Bank of Pakistan (SBP) and Nepra Act as “prior actions” for the formal revival of much-awaited second review under the $6 billion programme for Pakistan.
Without implementing all the “prior actions”, including raising power tariff, taking additional taxation measures by FBR, introducing amendments to the SBP and Nepra acts, the IMF programme cannot be revived. The IMF is expected to convert structural benchmarks into prior actions that will be linked for the formal revival of the Fund’s programme.
Many independent economists, especially former economic adviser Dr Ashfaque Hassan Khan, are suggesting to the PTI-led government to say goodbye to the IMF programme if the government wants to revive the economic growth after witnessing a major blow in the wake of Covid-19 pandemic. If the IMF programme would be revived, then all those measures would have to be taken by the government that would further choke the economic growth, they suggested.
Now the revival of the IMF programme till December 2020 is out of question, so it will be possible during the next calendar year 2021 either in March 2021 or after approving the 2021-22 budget.
But it requires implementation on all “prior actions” that can only pave the way for accomplishing the pending second review with the approval of Fund’s Executive Board. The Pakistani authorities are ‘consistently engaged’ with the IMF high-ups for resolving all outstanding issues such as raising power tariff, FBR’s additional taxation measures and introducing amendments to the SBP act 1956 and Nepra act.
“The IMF is expected to convert missed structural benchmark targets into prior actions for completion of a second review under the $6 billion Extended Fund Facility (EFF) programme”, a top official of the Finance Division confirmed to reporters on Thursday.
Special Secretary, Ministry of Finance Kamran Afzal, who is also an official spokesperson, told a select group of reporters that the IMF was very supportive for providing Rapid Financing Instrument (RFI) after the outbreak of Covid-19 pandemic. “Our consultations with the IMF are underway and we are moving towards evolving a consensus for the formal revival of the programme and for the completion of the second review under $6 billion EFF programme,” he added. The spokesperson objected to describing the IMF programme as “stalled” or “halted” and stated that efforts were underway to achieve formal revival of the IMF programme.
Pakistan and the IMF teams are engaged on a consistent basis and the Fund remained very supportive in the aftermath of COVID-19 pandemic. He said that there was a fear of second wave of Covid-19 pandemic, so it had put the economy into the risk zone. He said although there were signs of economic recovery with the entry of Large Scale Manufacturing (LSM) from negative into positive zone, adding cement was showing impressive growth but could not say anything with authority because the data of the whole economy was not yet available.
He was of the view that the external loan inflows from ADB, WB and other multilateral creditors were on track on account of programme and project loans. The ADB, he said, was going to approve $300 million for Trade and Competitiveness Support by the end of the ongoing month.
About the Pay and Pension Commission report, he said that it would be done till the next budget and there would be no negative impact on existing employees of the public sector on their pension system under existing rules of business and procedures. However, for new entrants, there is a proposal under consideration for introducing a contributory pension system, he added.
https://www.thenews.com.pk/print/743146-formal-revival-of-fund-s-programme-imf-may-convert-all-missed-structural-benchmarks-into-prior-actions
