Islamabad:
The International Monetary Fund (IMF) does not foresee any important setback for economic growth or Pakistan’s income collection in this fiscal year due to recent floods. With the exception of Punjab, the provinces have not reported significant economic losses, minimizing the possibilities of a downward review in the objectives.
According to government sources, the Pakistani authorities have evaluated losses related to floods in three rivers, but the evaluation of the infrastructure destroyed or damaged in Punjab is still ongoing.
Government sources said an IMF delegation shared its views on the economic impacts of floods during a starting meeting with the Minister of Finance, Muhammad Aurengzeb. The governments of Baluchistan, Sindh and Khyber-Pakhtunkhwa (KP) shared their initial evaluations of flood losses with the IMF team during separate meetings.
The sources said that during the start meeting, the IMF team observed that, according to the initial contribution, there were no significant economic losses. However, the IMF said that the damage evaluation report would wait, the sources added.
The global lender did not see any impact on floods on tax revenues. He stressed that the Federal Income Board (FBR) should share the visible result of the transformation plan. Prime Minister Shehbaz Sharif had approved the transformation plan last year to revitalize fiscal machinery and also gave more than RS55 billion for several initiatives under the plan.
IMF’s observations on the impact of floods occurred in the heel of the Prime Minister’s request to the IMF managing director to take into account flood impacts during review meetings. The IMF was informed that the Government could comply with the expense related to the floods of the contingency group and that it might not need additional resources, the sources said.
Pakistan-IMF review conversations began on September 25, which will continue until October 8. The successful culmination of these conversations would pave the way for the launch of two sections, for a total of more than $ 1.2 billion under two different loan programs.
In addition, the sources said, Pakistan’s internal evaluation was that there would be no important impact of floods on economic growth. The Government has established a growth objective of 4.2% and is still waiting from 3.7% to 4%, the sources added.
The Planning Commission estimated total economic losses in around RS360 billion or 0.3% of the size of the economy. The commission evaluation was that GDP growth can still remain around 4%.
One of the reasons not to estimate the great losses for crops was that the sowing of rice and sugarcane took place more than the area was initially estimated. This would compensate for the impact of crop loss, they added.
The current account deficit would not increase beyond the estimated figure, since an additional need for imports is not projected due to floods, the sources added. The Pakistani authorities also do not see any important increase in imports. However, the IMF has not yet shared its projection of economic growth, imports and current account deficit.
The sources said the IMF delegation raised the issue of delay in the publication of the Governance and Corruption Diagnostic Evaluation Report. The authorities assured the global lend that the government would publish the report within this week.
The report indicates numerous deficiencies in the judicial, administrative and corporate structure of Pakistan, which contributed to a poor government in each important sphere of life. The IMF has also granted more than a dozen recommendations to guarantee the rule of law and the integrity of the Judiciary.
During its meetings with three provinces, the IMF pointed out a low expenditure on health and education in the last fiscal year. The KP government said that low health expense was due to the fact that many doctors could not be filled due to the slow hiring process.
The IMF asked if the provinces could comply with the additional spending on the rehabilitation related to floods. The sources said that provincial governments did not indicate the need for additional resources due to limited impact.
However, the Punjab government position will be important in this regard, which plans to provide a comprehensive rehabilitation package to affected people. The province is the worst affected by floods and its meeting with the IMF will take place this week.
The governments of KP and Sindh shared their initial evaluations. According to the authorities, Sindh estimated that economic losses can remain in the range of 40 billion to RS50 billion. The KP government told the IMF that the losses could be in the RS30 billion range.
The FBR is still the weakest link in the chain. The tax authorities are struggling to achieve the objective of RS3.083 billion RS3.083 of this quarter. They needed more than RS500 billion on September 30 (today), the end of the first quarter of the current fiscal year, to achieve the goal.
The presentation of the income tax declaration is also around 3.2 million compared to the total of 7.7 million statements filed for fiscal year 2024. The FBR has also extended the date of import tariffs and tax -free sugar in two months to November. Previously, he had notified that sugar can be imported free of taxes until September 30.
The FBR also granted an additional extension of two months to merchants in real -time electronic transmission of sales tax receipts to FBR computers. It was the second extension, which is equivalent to accepting the impracticability of the previous deadlines.
