IMF urges tax reform, transparency

In Local
April 13, 2024


International Monetary Fund (IMF) Managing Director Kristalina Georgieva has listed tax base, more contribution from the rich, and transparency in the public spending among the important issues to be solved by Pakistan to boost its economy for a follow-up programme.

Georgieva told an event at the Atlantic Council think tank that Pakistan was successfully completing the existing nine-month $3 billion stand-by arrangement (SBA) with the IMF and that its economy was performing somewhat better, with reserves now being built up.

The global lender’s MD was speaking to the think-tank on the eve of the IMF-World Bank Spring meetings being held in Washington from April 13 to 21.

Georgieva confirmed that Islamabad was in discussions for a follow-up programme to the SBA, but stressed it had important issues to solve.

“There are very important issues to be solved in Pakistan: the tax base, how the richer part of society contributes to the economy, the way public spending is being directed and of course, creating … a more transparent environment,” she said.

“The country is turning to the fund for potentially having a follow-up programme and there is a commitment to continue on this path,” Georgieva added, highlighting the pending issues that Pakistan still needed to address.

A Pakistani delegation, comprising Federal Finance Minister Muhammad Aurangzeb, State Bank of Pakistan (SBP) Governor Jameel Ahmad, Finance Secretary Imdad Ullah Bosal, and Economic Affairs Division Secretary Dr Kazim Niaz, will also be present in Washington for the meetings.

Last month, Pakistan and the IMF reached a staff-level agreement on the second and last review of the SBA, which, if cleared by the IMF board later this month, would release about $1.1 billion to Islamabad.

Pakistan’s external financing requirements for the next fiscal year would hover above $25 billion, which the country plans to bridge with the help of all the multilateral and some bilateral creditors.

Both sides have also spoken about negotiating a longer-term bailout and continuing with necessary policy reforms to rein in deficits, build up reserves and manage soaring debt servicing.

The Express Tribune on Tuesday reported that Pakistan’s finance minister would meet with Georgieva and other senior officials of the IMF and World Bank during his visit to Washington.

Sources told The Express Tribune that Aurangzeb was also scheduled to meet with US Assistant Secretary of State for South Asia Donald Lu and the deputy under secretary of treasury.

Meanwhile, the federal finance minister on Friday called on Prime Minister Shehbaz Sharif and briefed him about his upcoming visit to the US.

Aurangzeb discussed with the premier his scheduled meetings with the IMF, World Bank and other institutions, according to a PM’s Office statement. In the meeting, they also took stock of the overall economic situation of the country.

(With input from agencies and our NEWS DESK in Karachi)

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