ISLAMABAD: At a time when its economy is reviving, the International Monetary Fund (IMF) has advised Pak­is­tan not to leave its ongoing programme while Islam­abad is planning to launch Euro­bonds worth $2.5 billion to boost its foreign exchange reserves.

“I had a very constructive meeting with IMF officials on June 23 (Wednesday) regarding various issues,” Finance Minister Shaukat Tarin told Dawn after a briefing on the IMF programme to the National Assembly Standing Committee on Finance and Revenue.

At the meeting chaired by MNA Faiz Ullah, Mr Tarin said the government was also planning to raise sufficient funds through Sukuk bonds, green bonds and panda bonds. The Eurobonds would be issued in the next three to six months.

Mr Tarin said he had held out an assurance to IMF that Islamabad would remain in its programme. He also disclosed that IMF had shown willingness to be “flexible in their demands” from Islamabad.

“I have been assured of full support from the Fund side,” the minister said.

The change of policy from contraction to growth in the budget for 2021-22 was interpreted by many economists that Pakistan could get out of the IMF programme after improvements on the external side. However, Mr Tarin wants to continue with the programme “with some flexibilities”.

Says $2.5bn Eurobonds to be launched within months

He said the IMF would conduct its sixth and seventh review of the programme simultaneously in September. The IMF’s Executive Board is scheduled to meet on July 5-7.

“Now Pakistan’s case will be approved in the board’s meeting in September,” Mr Tarin said.

Before announcement of the budget, IMF had asked the government to impose income tax of Rs150bn on individuals, allow an immediate increase of Rs1.39 in power tariff and increase the electricity price by Rs4.95 in the second phase.

“This was not possible because these measures are inflationary,” the minister said.

In his statement during the meeting, Mr Tarin said he had told IMF that he planned to stop making capacity payments to electricity-producing companies. “I also gave a plan to IMF aimed at reducing line losses,” he said, adding that he had assured the Fund that he would put an end to increase in circular debt.

Asked about the sources for $25bn required next year, the minister said the amount would be raised through Sukuk, panda and green bonds to meet the demand for dollars.

Mr Tarin promised that all the anomalies as pointed out by the members of the parliamentary committee in the budget for 2021-22, especially pertaining to the business community, would be removed.

He said that to create an environment conducive to a national consensus on economy, he was ready to sit with the opposition parties for formulating a charter for the economy. He said the federal government is bearing the expenses for health and deployment of Rangers in the provinces.

To support the SMEs, he said, the government planned to provide Rs100bn loan in the next budget.

He confirmed that Section 203 introduced in the Finance Bill 2021 had been amended; so notices would be issued through a third party and the decision for any arrest would be taken at the level of finance minister. The power to arrest had been taken away from assistant commissioner of the Federal Board of Revenue (FBR).

He said audit would be carried out through a third party. “We have received information about 7.2 million tax evaders,” he said, adding that notices would be sent to tax evaders through third parties. “Those who do not want to enter the tax net will be arrested.”

The committee’s members demanded that non-profit organisations be allowed to open bank accounts. MNA Ahsan Iqbal said that registered NGOs or non-profit organisations face great difficulties in opening accounts.

The minister assured the committee that procedures for opening bank accounts for non-profit organisations would be reviewed.

Published in Dawn, June 25th, 2021