Tag: IMF

  • Punjab expected to achieve Rs630 billion cash surplus

    Punjab expected to achieve Rs630 billion cash surplus

    Despite missing the International Monetary Fund’s (IMF) cash surplus by a staggering Rs182 billion, hope still remains for Punjab. 

     

    Reports quoted provincial Information Minister Azma Bokhari as saying the IMF still believes that Punjab will be able to achieve the predetermined cash surplus of Rs630 billion by the end of the year.

     

    Bokhari was pleased to report that the IMF has officially recognised Punjab’s efforts to achieve a budget surplus. This was evident by IMF backing the government’s claim regarding the surplus.


    Additionally, Bokhari also addressed claims that had been circulating against the government. Said claims suggested that the provincial government had invested in a United Arab Emirates (UAE) based fund.

     

    The minister, however, firmly refuted the same, stating that no such matter had been discussed during the IMF’s meetings with officials from the government of Punjab.

     

    It may be noted that the reason for the shortfall of surplus in the previous quarter of the fiscal year was primarily the repayment of commodity related loans that had reduced the amount of money the provincial government could post as surplus.

     

    However, owing to the repayment of the loan, the next surplus will be greater by a large magnitude. This is due to the fact that interest payments will not have to be doled out on the expired loans. Besides that, reports said, the funds that had been used to clear the loans can now be booked as a budget surplus.


    This endorsement from the IMF spells great news as it comes at a time when the federal government in Islamabad is missing its objectives set out by the IMF. For instance, Islamabad failed to the IMF stipulated condition that was set to ensure that the Federal Board of Revenue (FBR) would collect at least Rs2.652 trillion in taxes.


    Moreover, the FBR was supposed to collect at least Rs10 billion rupees from traders as per one of the 40 IMF conditions. However, the government failed to meet the target by almost one million per cent. This was because the FBR was only able to collect a measly Rs1 million from traders.


    While assurances from the IMF for achieving a cash surplus of 40 billion rupees is likely to motivate Punjab’s lawmakers to continue following the roadmap set out by the global lender, the government is also showing a willingness to strictly adhere to austerity measures.

  • Pakistan’s IMF loan programme at risk as IMF requirements remain unfulfilled

    Pakistan’s IMF loan programme at risk as IMF requirements remain unfulfilled

    Pakistan’s seven billion dollar loan programme has fallen into jeopardy as the country fails to fulfil the requirements of the International Monetary Fund (IMF), journalist Shahbaz Rana revealed on October 31.

    Rana said that IMF had directed the Pakistan government to collect around PKR 13,000 billion in taxes for the ongoing fiscal year.

    Federal Board of Revenue (FBR) has failed to collect the targeted tax for the first quarter (July to September), leaving PKR 90 Billion tax shortfalls despite securing advance taxes from several companies, he added.

    As per the IMF’s direction, the Pakistani government was only able to collect 10 lac rupees from the traders for the first quarter of the year instead of the IMF-described target of PKR 10 billion rupees.

    Chief Minister (CM) Punjab Maryam Nawaz’s subsidizing in the province has been directly or indirectly impacting the IMF loan programme, Shahbaz Rana maintained.

    Earlier, the Punjab CM had announced a 14 rupees electricity unit subsidy for two months in the province by cutting the development budget.

    Journalists also observed that during the ongoing second quarter (October to December), the government might again fail to collect the targeted tax and may face a PKR 300-350 billion shortfall.

    The government will face more than PKR 400 Billion tax shortfall in the first six months of the three-year loan programme, which will definitely impact the IMF programme’s longevity, Rana predicted.

    All provinces failed to achieve a total cash surplus budget of PKR 342 Billion, achieving PKR 160 Billion for the first quarter.

    Furthermore, the IMF again urged Pakistan to allow a further devaluation of the rupee, despite Pakistan’s Deputy Prime Minister Ishaq Dar’s belief that the currency has already been devalued by at least 16 per cent, Rana concluded.

  • Did Tribune delete a story about German Ambassador’s letter to COAS Asim Munir?

    Did Tribune delete a story about German Ambassador’s letter to COAS Asim Munir?

    In a surprising development, The Express Tribune’s website has deleted an article by journalist Shahbaz Rana about the German Ambassador’s letter to Chief of Army Staff (COAS) Gen Asim Munir urging his intervention over the termination of an IPP deal.

    Although the article is still available in print and e-newspaper, it cannot be found anywhere on the website. Netizens wondered about the sudden disappearance of the article while also archiving it on social media.

    Shahbaz Rana revealed in the story that German Ambassador Alfred Grannas wrote to the army chief after German investor Siemens was allegedly forced to agree to a settlement for shutting down a 450 MW power plant. However, the government maintains that the agreement was a mutually negotiated settlement rather than a coerced decision.

    Rana wrote: “Siemens holds a 26 percent stake in Rousch Pakistan Power Limited, one of the five power plants whose contracts were terminated this month in an effort to reduce electricity costs by 60 paisa per unit. Germany, however, hasn’t accepted this termination but is willing to end the contract if Pakistan meets at least six conditions.”

    The German ambassador, in his letter to the COAS, stated that the “unusual manner in which these negotiations continue to be conducted is already damaging the trust of German enterprises and investors.”

    The German investor has proposed six conditions for an amicable resolution. First is the guarantee from the Ministry of Finance and the State Bank of Pakistan to ensure all settlement funds, currency transfers, historic and future dividends be transferred to German bank accounts. Secondly, the German investor seeks the resolution of a sales tax dispute with FBR and the withdrawal of all pending legal proceedings against the plant.

    Thirdly, it proposed that after the handover, Siemens seeks release from any ongoing maintenance or preservation obligations for the complex.
    Fourthly, an amendment in the indemnification clause in the settlement agreement should be made to include protection for all board directors.
    Fifth, board members and shareholders must be indemnified, defended, and held harmless from and against any claims or taxes related to the project and its termination. Lastly, an immediate transfer of Rs. 3.1 billion in dividend arrears to Germany as a gesture of good faith.

    It should be noted that the Rousch power plant contract has been renegotiated three times since 2000, each time resulting in less than guaranteed dividend payments to investors and shareholders.

  • IMF director says Pakistan’s 24th loan programme could be last if conditions met

    IMF director says Pakistan’s 24th loan programme could be last if conditions met

    Director of the International Monetary Fund’s (IMF) mission for Pakistan, Nathan Porter, has claimed that if the country faithfully follows the IMF’s economic advice, the current programme would be the last for Pakistan.

    Appearing in an interview with Voice of America, the IMF director said that after the economic crisis of 2023, Pakistan’s economy has been improving, which he deemed crucial for the foundation of economic progress.

    Responding to Prime Minister (PM) Shehbaz Sharif’s recent statement declaring that the 24th IMF loan programme would be the last for the country, Nathan Porter said that this could be possible if Pakistan sincerely acted on economic reforms.

    Commenting on Finance Minister Aurangzeb’s statement regarding the tough conditions imposed on Pakistan, the IMF director rejected the claim, adding, “IMF recommended solutions which the concerned country needed to get out of the economic uncertainty.”

    Porter further said the IMF’s stance on Chinese loans to Pakistan was the same as its perspective on the loans of other countries.

  • IMF urges Punjab to end electricity subsidy, imposes more conditions

    IMF urges Punjab to end electricity subsidy, imposes more conditions

    The International Monetary Fund (IMF) has put forward at least three strict conditions in Pakistan after the Punjab province gave Rs45 to Rs90 billion in electricity subsidies for two months.

    Last month, President of Pakistan Muslim League-Nawaz Muhammad Nawaz Sharif announced that Punjab government would provide relief of fourteen rupees per unit to consumers using up to 500 units of electricity in August and September bills.

    The IMF has asked the province to end the temporary subsidy by September 30th while also clarifying that no province w
    could give such a subsidy during the 37-month Extended Fund Facility (EEF) programme.

    According to IMF, it was one of the conditions for the bailout that no provinces would take such a move. This brings into question Prime Minister Shehbaz Sharif’s previous statement when he encouraged other provinces to follow suit of Punjab.

    Tribune reported that the IMF also introduced the condition that would bind the provinces to not introduce any fiscal policy that could undermine the commitments given under $7 billion loan.

    The provinces have committed to signing a National Fiscal Pact by the end of September, which would mean they undertake some expenditures that are currently the federal government’s responsibility.

  • Uncertainty surrounds Pakistan’s $7 billion IMF bailout as approval date still not confirmed

    Uncertainty surrounds Pakistan’s $7 billion IMF bailout as approval date still not confirmed

    Pakistan’s much-anticipated $7 billion bailout package has not yet been scheduled for review by the International Monetary Fund (IMF) executive board, with the agenda extending only until August 30, according to the IMF’s recently released calendar.

    In July, Pakistani authorities and the IMF reached a staff-level agreement, potentially paving the way for a 37-month Extended Fund Facility (EFF) valued at SDR 5,320 million (approximately $7 billion).

    However, this agreement hinges on the approval of the IMF Executive Board, which is contingent upon Pakistan securing necessary financing assurances from its development and bilateral partners.

    The proposed programme is designed to build on the hard-won macroeconomic stability achieved in the past year. It aims to strengthen public finances, reduce inflation, rebuild external reserves, and eliminate economic distortions to foster private sector-led growth.

    Despite five weeks having passed since the staff-level agreement, Pakistan has yet to bridge an external financing gap of up to $5 billion.

    This delay has prevented the country from signing the Letter of Intent (LoI) required to formally request the IMF executive board’s approval of the $7 billion package under the EFF programme.

    The LoI is a critical step in requesting the IMF’s endorsement of the 37-month, $7 billion EFF programme. Without this approval, Pakistan cannot proceed with the much-needed financial support.

  • ‘Our govt said goodbye to IMF, who approached it later?’ — Nawaz Sharif

    ‘Our govt said goodbye to IMF, who approached it later?’ — Nawaz Sharif

    Former Prime Minister Mian Nawaz Sharif claimed during a press conference in Lahore that some judges removed him from office because he refused to accept a salary of 10,000 dirhams from his son, Hassan Nawaz.

    He pointed out that a household’s electricity bill was only 1,600 rupees under his administration, which has now increased to 18,000 rupees. He also noted that the dollar was valued at PKR 104 during his tenure, and that the cost of flour has now surged, affecting the cost of living.

    Sharif mentioned that “Rs 14 per electricity unit will be credited to the August and September bills for consumption ranging from 0 to 500 units. The Punjab government has also introduced solar panel schemes, budgeting Rs 7,000 billion for the middle and lower-middle classes.”

    He added, “I said goodbye to the International Monetary Fund (IMF) during my time in office, but who approached the IMF afterward?”

    “The current condition of my country pains me, and we should not forgive those who brought us to this point,” concluded the PML-N supremo

  • IMF wants FBR to bring over 20 million Pakistanis into tax net in five years

    IMF wants FBR to bring over 20 million Pakistanis into tax net in five years

    To broaden the tax base, the Federal Board of Revenue (FBR) has outlined its five-year objectives to the International Monetary Fund (IMF), sources reveal.

    The FBR aims to include over 20 million individuals in the tax net over the next five years, as per the IMF’s requirements.

    To meet this goal, the FBR plans to register 3.72 million people and 23,500 associations of persons within the current year. Additionally, more than 9,500 companies will be incorporated into the tax system during this financial year.

    For the following fiscal year, the FBR’s target is to add 3.91 million individuals, associations, and companies to its records. By FY27, the board aims to enrol 4.1 million non-filers, with a further increase to 4.31 million individuals by FY28.

    The goal for the 2028-29 financial year is to incorporate 4.525 million people into the tax net.

    Sources indicate that the IMF has insisted on the strict implementation of this plan, starting from the current financial year.

  • IMF’s fiscal strategy for Pakistan criticised for overlooking debt restructuring

    IMF’s fiscal strategy for Pakistan criticised for overlooking debt restructuring

    The International Monetary Fund (IMF)’s current fiscal strategy for Pakistan, which focuses on strict fiscal consolidation—entailing reduced spending and increased revenue—has come under significant scrutiny.

    Critics, including Murtaza Syed, a former deputy governor of the State Bank of Pakistan and ex-IMF official, question the approach due to its lack of emphasis on debt restructuring.

    In his article “Debt Will Tear Us Apart (Again)”, Syed highlights the IMF’s omission of debt sustainability in recent discussions.

     Despite Pakistan securing a staff-level agreement with the IMF for the 24th time, this absence is surprising given the IMF’s near-declaration of Pakistan’s debt as unsustainable in May. Syed suggests that both Pakistan and the IMF might be shying away from a transparent evaluation of the debt burden.

    Syed warns that the current “extend and pretend” strategy could lead to severe repercussions. He argues that it will impose harsh austerity measures on a population already burdened by stagnant income, a historic cost of living crisis, and political instability.

    This approach may result in deeper losses for creditors and further damage the IMF’s reputation.

    The article provides stark figures illustrating Pakistan’s debt crisis. The country owes an average of $19 billion in principal repayments annually, which exceeds half of its export revenues.

    Additionally, Pakistan will require at least $6 billion per year to cover its current account deficit, bringing its total external financing needs to around $25 billion annually until 2029.

    Moreover, the government will need to allocate an average of 6.5 per cent of GDP for interest payments on existing debt over the next five years.

    Syed criticises the IMF’s optimistic forecasts for Pakistan’s economic variables, noting that previous predictions have often been unrealistic. He argues that fiscal consolidations, particularly in a weak global environment, tend to fail in making debt more sustainable.

    In his conclusion, Syed calls for a shift from harsh fiscal measures to a more balanced approach that includes debt restructuring, to reduce financial pressures and support economic development.

  • SBP to introduce digital currency in Pakistan with technical support from IMF, World Bank

    SBP to introduce digital currency in Pakistan with technical support from IMF, World Bank

    In a media briefing held today in Karachi, Deputy Governor of the State Bank of Pakistan (SBP), Salimullah, announced that the central bank is currently evaluating the introduction of a digital currency.

    This project is being pursued with technical support from the World Bank, in collaboration with the International Monetary Fund (IMF).

    Salimullah highlighted that efforts are underway to link Pakistan with 60 countries, including those in the Middle East, to enhance remittance flows.

    Looking ahead, the governor revealed that the Raast payment system will be integrated with the Arab Monetary Fund’s cross-border payment platform, Buna, by next year.

    Buna facilitates secure, cost-effective, and transparent transactions for financial institutions and central banks across the Arab region and beyond, enabling payments in both Arab and major international currencies.

    The integration with Buna is expected to provide 60 million Pakistanis living abroad with the capability to transfer funds instantly and at minimal costs, significantly boosting economic and financial connectivity.