Islamabad:
Prime Minister Shehbaz Sharif on Wednesday, CEO of the International Monetary Fund (IMF) called on to facilitate certain strict loan conditions in the light of the devastating floods. However, the global lender is first expected to review Pakistan’s budget to verify whether significant allocations have been made for exemption and rehabilitation of the affected population before considering concessions in the Bailout program of several trillion dollars.
Pakistan is ready to begin conversations with the IMF on Thursday in the middle of mixed performance on the revenue front, after failing to fulfill several agreed conditions. The most important concerns include the Federal Board of Revenue’s (FBR) underpretesty and the government’s continued inability to reform state-owned companies considered as big weak points in the negotiations.
In one step at the last minute to accommodate another condition of the global lender, the government allowed the commercial import of five -year -old passenger cars on Wednesday. However, it also escaped a 40% regulatory duty to protect local car collectors from increased competition.
Premier Shehbaz sought relief in his meeting with the IMF Managing Director, Kristalina Georgieva, on the sidelines of the UN General Assembly Session, hours before the global lender and Islamabad were to lock in 14-day long lectures for the release of a loan of $ 1 billion.
“The Prime Minister said the impact of recent floods on Pakistan’s economy must be incorporated into the IMF’s review,” reads a statement that the Prime Minister’s office, which was issued after the meeting with Georgieva.
The Ministry of Finance said the government is seeking relief from the IMF in the form of relaxed goals for the primary budget surplus and cash surplus to meet further expenses for flood -affected society. It is also working on a relief package for the agricultural sector.
However, sources said the IMF has conveyed that it would first see the use of the emergency funds allocated in the budget to meet unforeseen expenses such as dealing with natural accidents.
There has been concern that the floods can cause major losses, but the damage is now expected to be far lower than originally feared.
Sources said that a formal assessment of flood damage has not yet been completed as the committee led by Planning Minister Ahsan Iqbal has not yet submitted his report. They added that without a specific assessment, it can be difficult to ensure meaningful relief from the IMF.
Sources added that the IMF would also review the expenses out of the emergency room value of around the RS400 billion. The government has not yet allocated any significant means to the flooded affected people from the emergency pool.
Originally, there was fear that the floods may have flushed away about 60% of the rice crop. However, the initial reports now suggest that only 4% of the total rice crop is completely damaged and an additional 7% are significantly damaged. Almost 16% rice crop is partly affected by the flood, causing 10% loss of yield in Punjab.
Floods have affected over a million hectares of rice throughout the province. Northern Divisions such as Gujranwala and Gujrat experienced the highest flood effects, while rain damage was more scattered, but included in the quantified yield losses.
The country’s total rice cultivation area is approx. 6.5 million acres, with floods that pose the greater threat to production. No damage was reported from the end of August, indicating a rapid escalation within a short period of time in September, which highlighted the vulnerability of Keychair’s growing regions of Punjab.
The IMF chief expressed his sympathy with all people affected by the floods. She noted the importance of the injury assessment to support recovery priorities.
During his meeting with the IMF CEO, Prime Minister IMF’s long -standing constructive partnership with Pakistan, which under Georgieva’s leadership had further strengthened a statement.
The Prime Minister recognized the IMF’s support under various instruments, a total of about $ 11.4 billion over the past few years. “Today, with the institution of deeply rooted structural reforms, Pakistan’s economy shows positive signs of stabilization and is now moving towards improvement,” the prime minister said.
The IMF chief praised the Prime Minister’s obligation to pursue sound macroeconomic policies and repeated the IMF’s continued support when Pakistan promotes the necessary economic reforms to ensure sustainable long-term economic growth.
State of cars
A meeting of the Economic Coordination Committee (ECC) in the cabinet was also held on Wednesday. The ECC considered a summary of commercial imports of used vehicles and, after detailed discussion, awarded approval of the proposals according to the Ministry of Finance.
The ECC decided to amend relevant provisions in the import policy, 2022 to allow the commercial imports of used vehicles.
Originally, only vehicles are not older than five years allowed until June 30, 2026, after which the vehicle’s age limit has been removed, it added.
The ECC also instructed that such commercial import would remain subject to strict compliance with prescribed environmental and security standards.
The ECC also approved the introduction of 40% regulatory duty in addition to the existing customs customs on the commercial import of used vehicles of less than five years old. This improved duty remains applicable until June 30, 2026. Then the duty is gradually reduced by 10% per year and reaches zero in 2029-30 in line with the recommendations of the Tariff Policy Board.
Sources said the IMF would investigate the FBR performance short as it could not meet many of the agreed goals.
