The Pakistan government “will have to convince” the International Monetary Fund (IMF) to “make fiscal adjustments in line with new financial realities” so as to avoid a major deadlock over the $6 billion Extended Fund Facility (EFF) agreement between the two parties. According to a report published in The News on Tuesday, the request may be made as early as next month, when a review mission of the international fund visits Islamabad between February 3-14 in order to hold consultations over the EFF with the Pakistani officials.
The News claimed that there were two options for the government to avoid a deadlock. One of these was keeping the revenue target of Rs5,238 billion unchanged, and reduce the rate of regulatory duty and additional customs duty and other restrictions on imports.
The second option, according to the English daily, would be a slash in the annual revenue target by Rs200 billion to Rs230 billion, and bringing the total revenue target down to around Rs5,000 billion.
However, the possibility that the IMF asks for reducing or abolishing regulatory duty/additional customs duty (RD/ACD) on selected imported items so that the revenue collection through imports could go up is still very much on the table. If this path was adopted, there will be no possibility to further revise revenue targets.
When will Pakistan’s debt to IMF end?
When Pakistan’s economy stabilises. However, thats not likely to happen anytime soon.