IMF perturbed over Pakistan’s privatisation delays

3 April, 2016 12:00 AM printer

ISLAMABAD: Perturbed over delays and setbacks to Pakistan’s privatisation agenda, the International Monetary Fund (IMF) has asked the government to push provinces towards improved taxation from agriculture and properties and correct its own system of under-invoicing in customs duties to increase revenues.
In a conference call on Friday, IMF mission chief to Pakistan Harald Finger told media persons that Pakistan authorities and Fund staff had been engaged in detailed discussions over a series of measures to broaden tax net and increase tax-to-GDP ratio beyond 14.5 per cent by 2019-20, reports the Dawn. He said Islamabad needed continued efforts against bad governance and corruption in the Federal Board of Revenue (FBR) to increase tax compliance. He said the discussions with authorities also focused on modernisation of property tax to make it market based in coordination with the provinces as well as issues in customs duty to manage under-invoicing.
“The various setbacks to the privatisation agenda are unfortunate,” said the IMF and noted that the authorities’ stronger focus on containing losses of the public sector enterprises (PSEs) in the interim was appropriate.
The staff report simultaneously launched on the occasion asked the government to put in place alternate power sector debt reduction plan to offset setbacks to divestment of power companies and implement biannual adjustments in gas tariff to ensure gas utilities did not face financial problems.
Responding to a question, the IMF official said the discussions on whether or not Pakistan needed another IMF programme to repay the current one would take place only when the existing arrangement comes to a close. He identified some of the key challenges to Pakistan including declining exports, security situation and appreciation of exchange rate coupled with possible problems with international financial markets.
The IMF staff said that Pakistan had assured the fund that in the current round of National Finance Commission (NFC) negotiations, the authorities will seek an agreement with provinces to balance devolution of revenue.