IMF asks Pakistan to cut reliance on China

The visiting IMF mission has asked Islamabad "to reduce its trade and commerce reliance on Beijing" and look for other international options by signing free trade agreements (FTA) with other countries too, a media report said on Friday.

The development comes as the mission has extended its stay in Pakistan for making more efforts to strike a consensus on the staff-level agreement as both sides so far persisted with their respective differences on "immediate measures" for reducing the revenue-expenditure gap and fixing cash bleeding energy sector, The News International said in the report.

Official sources confirmed to The News International on Thursday night that both sides were busy ironing out differences over revenue generation efforts as the Federal Board of Revenue (FBR) wants a further reduction in its revised target of 5,238 billion Pakistani rupees but the International Monetary Fund (IMF) desires to see the plan aimed at removing distortions and expanding narrowed tax base on a permanent basis.

According to senior Finance Ministry sources, the issue of discord between the IMF and financial authorities is the former's insistence to cut down heavily of Pakistan's reliance on trade and commerce ties with China and contract FTAs with other international partners.

This is a position Islamabad is not prepared to even consider.

Although, the Ministry of Finance and other officials claimed in their background discussions that there was no "deadlock" and the staff-level agreement would be finalized anytime soon.

But when they were asked to share details, they were non-committal saying that the talks were underway, so nothing could be stated with credence.

The mission arrived in Islamabad on February 2 for an 11-day second review of Pakis­tan's performance under the $6 billion bailout package signed in July 2019 amid a massive revenue shortfall in the first seven months of the current fiscal year, Dawn news said in a report last week.

The completion of the review against a significantly modified 39-month programme in November 2019 would determine if the government would secure disbursement in March of another tranche of about $450 million direly needed to build market confidence and foreign exchange reserves.

Pakistan has so far secured about $1.44 billion through an upfront release of about $991 million last July and the first instalment of about $452 million in December.

The review is taking place at a time the government has suffered a revenue shortfall of about $2 billion in the first seven months of the current fiscal against the target of $17 billion.