With top level changes imminent at the Ministry of Finance and the Federal Board of Revenue (FBR), Pakistan may have to negotiate another bailout package from the International Monetary Fund (IMF) with even tougher conditions.
An official source told Pakistan Today that the FBR had shocked the government after admitting that the revenue collection figure of Rs 1,590 billion announced on the last day of the last fiscal year was erroneous.
The revenue figure reconciled with the State Bank of Pakistan now stands at Rs 1,550 billion. The revised revenue collection target for the last fiscal year was Rs 1,588 billion. The source said Finance Secretary Dr Waqar Masood was likely to be made the chairman of the FBR and Economic Affairs Division Secretary Wajid Rana was expected to be appointed the finance secretary.
The top FBR hierarchy will change after the completion of an internal inquiry by the bureau that was to fix responsibility on officials that let the erroneous revenue collection figures go public. The inquiry report would be presented to the finance minister tomorrow (Monday). The publicity of the FBR’s failure to get the revenue collection target has compounded the government’s problems, as it was expecting that the IMF full mission would help revive the suspended programme.
The FBR’s failure also jacked up the fiscal deficit from an estimated 5.2 percent to 5.9 percent of the GDP and if the payment made for resolving the circular debt were included, the fiscal deficit would have increased to 6.6 percent of the GDP. The IMF had asked the government to keep the fiscal deficit below 5.3 percent and had emphasised on broadening the tax base by removing exemptions and taxing the rich.
In March, the FBR brought all exempt sectors under the general sales tax net and initiated proceedings against 700,000 tax evaders. Another official source said the problems on revenue and power side were complex and there were variations in the data provided by various departments. The IMF had made it clear that it wanted accurate data to be shared with it during the economic review in July.
“Under these conditions, the revival of the suspended programme looks bleak and Pakistan may have to negotiate a new programme with the IMF with stringent conditions,” the source said. Finance Minister Dr Abdul Hafeez Shaikh had told reporters late on Friday that the date of talks with the IMF will be finalized next week.
The talks with the IMF were tentatively planned between July 20-27 but had to be delayed due to the non-compilation of economic data and resignation of former governor Shahid Kardar. The government has compiled its economic data, including tax revenue, but the circular debt in the power sector is yet to be resolved, causing a delay in the finalization of the date for talks.
