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Finance Minister Muhammad Aurangzeb on Friday expressed hope for reaching a Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) by the end of the fiscal year (June 30), adding that there haven’t been any final discussions with the Fund yet.
During the gong ceremony at the Pakistan Stock Exchange, the finance minister elaborated that the details of the deal would be discussed during the spring meetings in Washington where the delegation led by him would go around “14th to 15th April”.
The finance minister elaborated that they had requested to “enter a larger and longer programme” during the SLA discussions to which the IMF was receptive, adding that the size of programme hasn’t been decided yet.
“We need the Extended Fund Facility (EFF) to execute the structural reform agenda,” he said, “The operative word here is execution, not getting into debating clubs or policy prescriptions. We have known the what and the why for decades.”
Aurangzeb added that the request to enter the EFF will be further formalised in spring.
“But there hasn’t been any final discussion or agreement with them but it is our wish that by the time we wrap up this fiscal year, the SLA is reached,” he stated, adding that the previous SLA was important to ensure continuity of macroeconomic stability.
Over implementing the reforms, Aurangzeb elaborated, “And we have gone into the implementation stage in the last few weeks with a two-pronged strategy.”
“There is one short-term to medium-term [phase], which is closing the gaps, stemming the leakages and the losses,” he said, adding “And the second one is phasing in the structural reforms in the medium to longer-term.”
He gave the example of the Federal Board of Revenue (FBR)’s challenge of stemming leakages: “We have the Track and Trace system — we have the functionality. [However], the implementation has been lax therefore the operational effectiveness is just not there.”
Regarding other leakages, he mentioned that roughly Rs1.7 trillion of litigation were languishing in tribunals, adding that in conjunction with the law minister and the attorney general for Pakistan (AGP), they have asked the tribunals to make decisions in the next three months for timely execution.
“Concurrently, we start bringing the undertaxed and untaxed sectors into the fold along with the digitalisation effort which has been done in some vertical,” he said that the end-to-end digitalisation was necessary to bring transparency and a “superior client experience”.
He said that would restore trust and confidence in this institution and also “deal with some aspects of the social contract”.
Trade with India not yet brought to the table
While talking to a group of reporters, the finance minister, when asked about decision regarding trade relations with India, stated: “I cannot comment on that, this is ultimately the prime minister, cabinet and parliament’s decision, but no such thing has come to my table yet.”
As for the FBR’s digitalisation agenda, Aurangzeb stated that the Request for Proposal (RFP) for a “world class consultant” would issued on April 8th and that the consultant hired would be someone who has experience in emerging markets such as Pakistan.
“God willing, by the end of April we will be appointing that consultant,” he said.
Previously, the minister had apprised the FBR officials of his top priority plan hovering around two pillars — documentation of the economy and end-to-end digitalisation of the tax system.
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