Islamabad:
The International Monetary Fund is ready to allow budgets of around 500 billion rupees in budgets to compensate for the impact of floods, but without compromising the primordial objective of maintaining budgetary discipline.
But the Pakistani authorities insist on relaxation of the same amount compared to the annual primary budgetary objective, according to the federal and provincial authorities engaged in these negotiations.
Punjab, which is the most affected province, also remains conditionally determined to deliver the surplus in cash of 740 billion rupees, provided that the Federal Board of Return achieves its objective of RS14.1,000 billion rupees. The provincial government is still looking for tax spaces to meet the rehabilitation expenses for people affected by floods.
The Pakistani authorities had officially requested help with the aim of the primary budgetary surplus and the IMF cash surplus to respond to emerging expenses for the rehabilitation of people affected by floods, the sources added.
Government sources have said that the IMF has not yet agreed to reduce these objectives, but was willing to make budget adjustments.
The IMF position does not do well with the federal and provincial authorities who are faced with the challenge of responding to these expenses without any external aid. If the budget adjustment is accepted, it will link the hands of the federal government which already faces budgetary challenges.
There have also been cases where the IMF has softened targets in certain other countries to respond to unforeseen expenses. But he is not willing to allow additional space.
The sources said that he had emerged during these discussions that there were a minimum of 500 billion rupees in the impact of floods on income and expenses.
They said that the IMF was ready to allow these adjustments and compensate for the main balance impact by reducing the public sector development program (PSDP) and using the budgetary contingency pool.
Sources have indicated that the FBR’s objective could be revised downwards from RS170 billion to Rs13.96 Billion. The IMF was also ready to reduce revenues without tax government and the objective of Punjab agricultural income tax, they added. The impact of non -tax income mainly in the captive levy and provincial income is 140 billion rupees, sources said.
The sources have indicated that the IMF also assessed that provincial expenses could also exceed around 150 billion rupees due to the cost linked to floods.
As an alternative, the IMF proposed that the federal government can reduce the PSDP by 300 billion rupees and 150 billion rupees to be removed from the emergency basin intended for such emergencies. This will have no impact on the global primary excess objective.
The sources indicated that the Pakistani authorities were of the opinion that Pakistan should have provided additional budgetary space instead of authorizing budgetary adjustments. The IMF was reluctant to provide additional space at this stage, they added.
There is a strong opinion that the IMF should allow additional space and reduce the primary budgetary budgetary objective by around 500 billion rupees or 0.4% of GDP.
For this exercise, the IMF has set the primary primary budgetary objective at Rs 3.1 Billions or 2.4% of GDP and the excess cash target for the four provinces at RS1.464 Billions or 1.1% of GDP. But the main balance is linked to the capacity of the provinces to generate a cash excess and the FBR capacity to achieve the objective of RS14.13 Billion.
There have been apprehensions that the Punjab government, which has undergone major losses, may not be able to achieve its excess species.
However, Punjab Minister of Punjab, Miss Azma Bukhari, said the provincial government had been determined to implement its part of the promise provided that the FBR has achieved its objective.
“Punjab is attached to the estimated provincial part of 740 billion rupees (which is) subject to that of the FBR to reach its objective of RS14.1 Billion,” said Azma Bukhari while answering a question of the Express PK Press Club.
To another question, Miss Azma said that Punjab had not informed the IMF that he will not deliver the excess target of 740 billion in cash.
Within the framework of the IMF program, the 740 billion punjab rush exorcies is very critical for the ability of the federal government to respect the state to show the surplus of the primary budget. Azma said Punjab expects the FBR to reach its objective of RS14.1 Billion and so far compensates for its deficit.
There is practically no possibility that the FBR achieves its annual objective, as the previous year. Even if there is an agreement on revising the revision of the RS167 billion FBR’s drop in the FBR of RS167 billion, the new target of RS13.96 Billion will not be reached.
The FBR has already missed its objective of the first quarter with a wide margin of RS198 billion despite drastic legal powers.
FBR fails costs the provincial government a lot, which are then forced to reduce their expected expenses. During the last financial year, the government had to increase oil withdrawal rates to compensate for the impact of the missing FBR objective on the overall primary budgetary objective.
During the last financial year, the Punjab government had to take a blow of almost 500 billion rupees due to the FBR.
The IMF-FBR meeting on this collection of income from the financial year has remained below the expectations of the government after the FBR could not meet the IMF that it had a credible plan to reach the annual objective of RS14.13 billion rupees.
To a question, the Minister of Information of Punjab said that so far the investigation into the evaluation of the damage caused by the floods is underway and that the Punjab will have better visibility on the expenses related after the angle once this survey is completed.
It is possible that the provincial government of Punjab can make adjustments in its current and development budgets to create a space for spending for the rehabilitation of people while remaining in the targets of the UNIMPLUIE of the Global IMF.
Sources have said that macroeconomic objectives, mainly inflation, economic growth rate and current account deficits were still open to IMF decisions.
The government presented a situation of 3.5% to 3.9% of economic growth after the situation, while the IMF assessment was that GDP growth may not increase by more than 3% during this financial year. The objective of inflation is also open to discussions.
The Ministry of Finance has presented a deficit projection of the current account of $ 500 million after the drop, but it can also be agreed by the IMF due to higher than expected imports of goods and narrowing exports.
