IMF programme likely to be restored

The IMF mission would visit Pakistan within the next few weeks and expressed the hope that the Fund program would be energized soon. It was said that that there was no increase in the public debt in the last four months, which stood at Rs36.4 trillion on June 30, 2020 and which poised around the same value on October 30, 2020. The claim regarding the public debt was made on account of benefit gains accomplished through appreciation of rupee against dollar in the latest few months, so in rupee terms the public debt remained at the same levels in the last four months period. As against the first four months when the country was experiencing budget deficit, this recovery could be simply labeled just as figures tricked otherwise the government would have to borrow to finance its deficit. Two challenges facing raising tax revenues and bringing reforms into power sector would be up for discussion during the upcoming IMF talks. The food inflation was brought down in the last three weeks as the Pakistan Bureau of Statistics depicted decreasing trends. Consequent to shortage of wheat by approximately million tons, the government imported the commodity which brought down the prices of food items and now efforts would be made to additionally reduce the price rise. The current account deficit was cut down from $20 billion to about $3 billion last year. The government paid Rs5, 000 billion on account of interest payment on public debt in the last two years. There was not a penny worth increase in public debt in the last four months and it stood at Rs36.4 trillion on October 30, 2020. This demonstrates that the government was stiff in financial control. Large Scale manufacturing growth stood at around 5 percent and cement dispatches stood at 16 to 20 million tons. The automobile, fertilizer and other sectors are witnessing splendid growth. The textile orders were obtainable till December 2020. The foreign exchange reserves reached $13 billion. The fiscal side of the economy also performed satisfactory whereby the FBR outstripped four-month target and priced at Rs1, 340 billion. The government paid back Rs 128 billion in refunds in the first four months compared Rs50 billion during this period in the last fiscal year. Summing up the government had paid back Rs248 billion during the past financial year.
The external and internal sector of the economy have advanced , expenditures cut down and no supplementary grant was recommended for financial control and that the borrowing from the SBP was brought to nil. The expenditures of PM, President Houses and ministries were also dropped at the same time. Defence spending was also reduced. For bringing relief for the poor people efforts were taking place for creating more job opportunities and that construction package and Kamyab Jawan Program were introduced with the allocation of Rs100 billion for providing loans to youth. The foreign direct investment brought about $733 million in the first four months of the current fiscal year. The 100 biggest companies earned profit by 36 percent at the same time banks’ profits gone up by 56 percent. The Pakistan Stock Market performed very well in the entire Asia and all these signs show that the economy was on the path of growth course.
The second wave of Covid-19 pandemic was placing a danger for the economy. Approximately 1.9 million tons of imported wheat would be reaching Pakistan soon, therefore, enough stocks are available and there would be no deficiencies of wheat and sugar. Pakistan had very good relations with the IMF for the fundamental reason that all matters were the way these were committed, including better tax collection, strong reduction in government expenditures and paying off debts in a best way. The government availed certain relief that were not share of the original agreement in order to motivate to the construction sector and tax discounts to businesses to shun declining in economy. The IMF was fully amalgamating with Pakistan on all these matters and was prompt to provide an extra $1.4 billion to fight influence of Covid-19.The two sides also have to agree on how to ameliorate the electricity system. A lot of dedicated work was being put in to bring about amelioration in this area and the prime minister was himself showing leadership in this respect. The past condition was being altered and energy-fuel mix was being ameliorated to go towards solar, wind and hydropower resources. The economy was recovering as seen from both the external and internal indicators. All primary economic indicators have moved in the correct direction over the past one month and are a positive factor in the market as observed from the stock market, foreign direct investment and large-scale manufacturing data. There was no shortage of wheat anywhere in the country and its prices were now on a downward trend. Wheat stocks stood at 4.2 million tonnes and were being escalated with 1.9million tonnes of wheat presently on the way, putting total availability at approximately 6.1million tonnes. The next season would start with a surplus wheat stock in April when new produce would begin appearing quickly.
The discussions between Islamabad and the mission will primarily focus on plans to improve the tax system and collection, as well as the power sector. If talks are successful, as is being hoped by the government, the programme will be revived, paving the way for the release of the third loan tranche of over $500million. So far the multilateral lender has disbursed $1.5billion under the facility. IMF has since helped lessen the virus’s economic impact. Liberal financial assistance from the IMF as well as other multilateral lenders also assisted efforts to cover the economy from the outbreak’s harmful impact.

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