ISLAMABAD – The International Monetary Fund (IMF) has expressed reservations over the government’s claims that the Federal Board of Revenue (FBR) would manage collecting the targeted Rs 1,604 billion during the current fiscal year. An official source privy to technical level talks said the IMF team formed the opinion after the revenue collection data for the last eight months was presented to it. The IMF team was of the opinion that the target was not achievable without the imposition of flood tax.
Since the government team stressed that the FBR would manage the collection target, it was decided that a meeting would be held on Sunday wherein the FBR chairman would give a briefing on the plan to achieve the target. The government has set a revenue target of Rs 1,667 for FBR, but later revised it to Rs 1,604 billion. On revising upward the fiscal deficit from 4.7 percent of the GDP during the current fiscal year, the source said no consensus had emerged, as the IMF team maintained that all the efforts should be made to maintain the fiscal deficit target.
Pakistan’s fiscal deficit was 5.2 percent of GDP in fiscal year 2008-09, while it jumped to 6.3 percent of the GDP in fiscal year 2009-10. IMF officials were of the opinion that the fiscal deficit should not have been allowed to increase to 6.3 percent last year and efforts should be made to maintain it below 5.2 percent.
They said the rise in fiscal deficit last year increased the inflation and hindered investment by the private sector that further decreased chances of increasing revenue collection.
They stressed for the approval of the autonomy bill for the central bank that was still pending due to parliamentary approval. However, the source said the IMF team acknowledged the political difficulties of the government in approval of additional revenue measures from parliament. They expressed satisfaction with the pace of power sector reforms, as the government informed them that due to an innovative solution, gas guzzling power plants had been closed down, bringing down the average power tariff significantly.
