Islamabad:
Prime Minister Shehbaz Sharif on Wednesday urged the managing director of the International Monetary Fund (IMF) to relieve certain strict loan conditions in the light of the devastating floods. However, the global lender is expected to first review Pakistan’s budget to verify if substantial assignments have been made for relief and rehabilitation of the affected population before considering any concession in the multimillion -dollar rescue program.
Pakistan will begin to talk with the IMF on Thursday in the midst of mixed yield in the income front, since he could not meet several agreed conditions. The key concerns include the low performance of the Federal Income Board (FBR) and the continuous disability of the government to reform state companies, both views as important weak points in negotiations.
In a last minute movement to meet another condition of the global lend, the Government allowed the commercial import of five -year passenger cars on Wednesday. However, simultaneously slapped a regulatory duty of 40% to protect local car assemblers from greater competition.
Prime Minister Shehbaz sought relief in his meeting with the IMF managing director, Kristalina Georgieva, outside the UN General Assembly session, hours before the global lender and Islamabad were going to block the 14 -day conversations for the release of a section of loans of $ 1 billion.
“The prime minister said that the impact of recent floods on Pakistan’s economy should be taken into account in the IMF review,” says a statement that the prime minister’s office issued after meeting with Georgieva.
Sources from the Ministry of Finance said that the Government is looking for IMF relief in the form of relaxed objectives for the main budget surplus and the cash surplus, to accommodate the additional expenditure for the communities affected by floods. He is also working on an aid package for the agricultural sector.
However, the sources said the IMF has reported that it would first see the use of contingency funds assigned to the budget to comply with unforeseen expenses such as dealing with natural calamities.
There has been concerns that floods can cause great losses, but now the damage is expected to be much lower than initially afraid.
The sources said that a formal evaluation of flood damage has not yet been completed, since the committee led by Planning Minister Ahsan Iqbal has not yet submitted its report. They added that without a specific evaluation, ensuring significant relief of the IMF can be difficult.
The sources added that the IMF would also review the expenditure of the value of the contingency group of around RS400 billion. The government has not yet assigned significant funds for people affected by the floods of the contingency group.
Initially, there were apprehensions that floods could have dragged around 60% of rice crop. But the initial reports now suggest that only 4% of the total rice crop is completely damaged and another 7% is substantially damaged. Rice cultivation of almost 16% is partially affected by flooding, which causes a 10% loss of yield in Punjab.
Floods have affected more than one million rice acres throughout the province. The northern divisions such as Gujranwala and Gujrat experienced the greatest flood impacts, while rain damage were more scattered but included in quantified performance losses.
The total rice cultivation area of the country is approximately 6.5 million acres, with floods that represent the greatest threat to production. No damage was reported at the end of August, which indicates a quick escalation in a short period of time in September highlighting the vulnerability of the key punjab rice growth regions.
The Chief of the IMF expressed its sympathy with all the people affected by floods. He pointed out the importance of damage assessment to underpin recovery priorities.
During his meeting with the IMF managing director, the prime minister appreciated the Construction Association of Long Data of the IMF with Pakistan who, under Georgieva’s leadership, had strengthened even more, read a statement.
The Prime Minister recognized the support of the IMF under several instruments, for a total of around $ 11.4 billion in recent years. “Today, with the institution of deep structural reforms, Pakistan’s economy shows positive stabilization signs and is now moving towards recovery,” said the prime minister.
The IMF chief praised the commitment of the prime minister to seek solid macroeconomic policies and reiterated the continuous support of the IMF as Pakistan advances the economic reforms necessary to guarantee a long -term sustainable economic growth.
Condition in cars
On Wednesday a meeting of the Economic Coordination Committee (ECC) of the Cabinet was also held. The ECC considered a summary regarding the commercial import of used vehicles and, after a detailed discussion, granted the approval to the proposals, according to the Ministry of Finance.
The ECC decided to amend the relevant provisions of the import policy order, 2022 to allow the commercial import of used vehicles.
Initially, only vehicles not over five years old will be allowed until June 30, 2026, after which the age limit of the vehicle will be removed, he added.
The ECC also ordered that such commercial import would remain subject to the strict compliance with the prescribed environmental and security standards.
The ECC also approved the imposition of 40% of regulatory duty, in addition to existing customs tariffs, in the commercial import of used vehicles of less than five years. This improved duty will remain applicable until June 30, 2026. Subsequently, the duty will be gradually reduced by 10% per year, reaching zero by 2029-30, in line with the recommendations of the Tariff Policy Board.
The sources said the IMF would be carefully analyzing FBR’s performance, since he could not meet many of the agreed objectives.
