ISLAMABAD: Pakistan will inform the International Monetary Fund (IMF) and the World Bank on Saturday whether it will increase power tariff by 6 per cent from April 1 or not and also brief them on the status of circular debt, which resurfaced and is about to suffocate the oil supply chain to thermal powerhouses.
The team of economic managers is in favour of increasing power tariff by 6pc with retrospective effect from April 1, but the political leadership wants to defer it till the next fiscal year, keeping in view the fear of a backlash from the public, official sources said.
Talks with the IMF began on Friday, but the two thorny issues of power tariff and circular debt were not discussed as the IMF wanted to take the World Bank on board, they said.
“We have discussed the provisional data till March 31 on budget deficit, revenue collection and the VAT issue. We have told the IMF that the Value-Added Tax bill has been tabled in parliament and the four provincial assembles,” a senior official, who attended the meeting, told The News.
Because of the delay in tabling the VAT bill in the four provincial assemblies, the IMF postponed its Executive Board meeting on April 2. Now it would be held either in the last week of April or in early May.
FBR Chairman Sohail Ahmed said the Pakistani officails told the IMF that the revenue collection target of Rs1,380 billion would be achieved.
He said the IMF had been conveyed that fiscal deficit target of 5.1 per cent would be met as the government would soon receive $800 million from Etisalat against the PTCL privatization proceeds. This would help contain the budget deficit.
Asif Bajwa, Special Secretary in the Ministry of Finance, when contacted, said the IMF Mission called on Adviser to the Prime Minister on Finance Hafeez Sheikh on Friday. Later, Pakistani officials and the IMF Mission had preliminary talks. He said the talks would resume on Saturday.
The IMF Mission, headed by Adnan Mazari, an Iranian-born US national, wanted, official sources said, to update itself on the performance criteria given to Pakistan for the fifth tranche of $1.2 billion under the $11.3 billion Standby Arrangement programme. The IMF Mission wanted to be updated on budget deficit, revenue and VAT up till March 31.
“We told them that the government of Pakistan is right on track in terms of budget deficit of 1.6pc in the third quarter till March 31. We told them that in March, the FBR collected Rs118 billion against the target of Rs120 billion, but explained that when the figures will be firmed up later on, the FBR will achieve the target,” the sources said.
Answering a question whether the government will achieve the revised 5.3 per cent target of fiscal deficit by June 30, the Finance Ministry official said Pakistan had told the IMF that the government would remain within the target.
Asked how was it possible particularly when the government did not want to increase power tariff by 6pc from April 1, and the prime minister had increased the development budget from Rs250 to RS300bn, the official said the exact impact of the 6pc increase in power tariff had been worked out at Rs8 billion from April 1 to June 30 period.
“This impact the government intends to absorb on its own.”
Asked how the government would neutralise this impact when it was running short of money, the official said the ministry had Rs26 billion in its pocket earmarked for the import of wheat that would not only absorb the impact but would also help contain the budget deficit.
About the increase in the development budget, the official said it is not possible for the executing agencies to spend the entire allocation by June, so we are expecting that the financial releases will be hovering around Rs250 billion. So the rise in the development budget too will not affect the budget deficit.
Source: http://www.thenews.com.pk/daily_detail.asp?id=233422
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