ISLAMABAD: The International Monetary Fund (IMF) on Monday briefed European and American ambassadors on the progress of Pakistan’s current bailout package as it extended discussions with the authorities.
The talks, stretching into their third day, were initially slated to conclude on Monday.
The government informed the Fund that it was planning to roll out a new pension scheme in July but challenges remained in its execution. The new pension scheme would reduce the post-retirement benefits of the government employees.
The sources said that the IMF hosted the ambassadors and representatives from at least nine European and Western nations and apprised them about the successes that Islamabad made under the current $3 billion stand-by arrangement (SBA).
The diplomats from the United States, European Union, France, Italy, Germany and Australia were among those who attended the briefing, according to the people privy to these discussions.
The foreign envoys were also told by the IMF that Pakistan showed the intention to express another bailout programme. However, the size and the duration of the loan were not clear at this stage.
The IMF informed the foreign envoys that Pakistan has made significant progress in achieving the programme objectives and there were encouraging results.
The lender also highlighted the challenging areas, mainly the low revenue collection, particularly by the provinces that now necessitate revisiting the National Finance Commission (NFC) award. A foreign diplomat inquired about the IMF’s position on the NFC award.
The people privy to the meeting said that the IMF was of the view that the provinces currently get a large pie of the federal taxes, which leaves no incentive for them to increase their own revenues from sectors like agriculture.
The IMF’s position is that when the provincial shares would be reduced they may make efforts to enhance their own revenues.At the moment, the transfers under the NFC make around 90% of the total provincial income. The Centre transfers 57.5% of its tax collection to the provinces as their share in the NFC.
The Express Tribune reported last week that the IMF urged Pakistan to revisit the NFC award aimed at striking a balance between the resources and the responsibilities of the provinces and the federal government.
