ISLAMABAD - Pakistan has convinced the International Monetary Fund (IMF) that there would be no mini budget in the country to bridge the tax collection shortfall as it would be met through non-tax revenues.

Talks for the second economic review continued on Wednesday, which had started from February 3.

The IMF has accepted the government’s viewpoint of not presenting a mini budget to achieve the tax collection target. Pakistan has assured that it would bridge the tax collection shortfall from non-tax revenues in the ongoing financial year.

The government has informed the Fund that non-tax collection would increase by Rs400 billion to Rs1.6 trillion in the current fiscal year from budgeted Rs1.2 trillion.

However, the IMF turned down the government’s proposal of further reducing the annual tax collection target. The IMF had already revised downward the tax collection target to Rs5238 billion from budgetary target of Rs5550 billion. 

Earlier, members of parliament, during their meeting with the IMF delegation, criticized the ongoing IMF programme, which has resulted in the 12-year higher inflation rate.

The IMF delegation held an in-camera meeting with the members of Senate and National Assembly Standing Committees on Finance and Revenue. The meeting has discussed the economic situation of the country. The IMF expressed its concerns over the government’s failure in meeting the economic targets.

The IMF stressed for eliminating tax concessions to achieve the targets. Sources said that it was also discussed that the government would take IMF on board before making relief measures.

The parliamentarians said that inflation is continuously increasing during the ongoing IMF programme. In January 2020, inflation had touched 14.6 percent that was highest in last 12 years. They further said that people are suffering due to the higher inflation in the country.

However, the sources said, the IMF delegation replied that it wanted to stabilize the Pakistan’s economy for which it had recommended measures. The IMF has also talked about spending on Sustainable Development Goals (SDGs).

The Fund also asked the parliamentarians to review Pakistan’s trade agreements with other countries. Pakistan’s exports to United States are around 16 percent while it is only 6 percent to China.

Meanwhile, the IMF also asked for rationalizing the tariff and taxes.

Later, talking to the media, Faizullah, Chairman National Assembly Standing Committee on Finance and Revenue, said that the government is not bringing any mini budget.

He further said that the government would introduce reforms in the annual budget for the next financial year. He hoped that the government would announce relief for the masses.

Chairman Senate Standing Committee on Finance and Revenue Farooq H Naik said that IMF had not talked about the tax collection shortfall in the meeting.

He further said that IMF and parliamentarians held talks on three main issues including SDGs, trade agreements with other countries and power tariffs.

The IMF delegation meeting with parliamentarians was part of its ongoing visit to Pakistan to review the economic situation before releasing the third tranche.

Talks are expected to complete on Thursday or Friday.  The IMF would release the third tranche worth of $450 million if the visiting delegationexpress satisfaction over the economic situation of the country.

Pakistan has so far received $1.44 billion from IMF in two tranches.

The IMF in July 2019 had approved a 39-month extended arrangement under EFF for Pakistan for an amount of about $6 billion.

Later, in a separate development, Senate Standing Committee on Finance and Revenue, which held under the chair of Farooq H Naik, rejected the government’s “The Tax Laws (Second Amendment) Bill, 2020”.

The committee noted that the bill is not a money bill, as 90 percent of the bill is not related to money bill. It also observed that the bill is against article 73 of the Constitution. Under the bill, the government has proposed fines in tax laws, which are not related to money bill.

However, the committee unanimously approved another bill, “The Banks (Nationalization) Amendment Bill, 2020” without amending it.

Earlier, the committee expressed displeasure over the absence of Adviser to Prime Minister on Finance and Revenue and Secretary Finance from the committee meeting.

The committee chairman said that the government is not giving importance to the parliament.