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Thursday, March 23, 2023

Pakistani officials accuse IMF of ‘misbehavior’

News ECG: Pakistani officials involved in the negotiations with the International Monetary Fund (IMF) allegedly accused the global lender of abuse earlier this week, according to a report by Pakistan-based news outlet the Dawn.

According to Pakistani authorities, the international lender allegedly changed its position at least four times before the staff-level agreement. Despite the IMF’s public declaration that it wants to support Pakistan’s low-income communities, they maintain that their demand won’t have that effect.

A high-ranking official said that the foreign lender was mistreating the country. The authorities, however, recognized that there were gaps in Islamabad’s diplomatic efforts and Pakistan’s credibility inadequacies coupled with trust deficit were major reasons why “some capitals were working towards Pakistan’s disintegration”.

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Pakistan had estimated a $5 billion funding requirement for the current fiscal year, but the IMF estimated a $7 billion overall financial gap. By the end of June, the State Bank of Pakistan’s foreign exchange reserves is predicted to increase by $7 billion, from their current level of $3.1 billion to $10 billion.

The Dawn reports that Pakistan has received three installments totaling $1.3 billion from Chinese banks. Pakistan has already received $700 million from China, and in the following days, another $500 million and then another $300 million would be granted. Also, it has been decided to send Saudi Arabia and the United Arab Emirates a combined $3 billion.

The IMF and Pakistan are engaged in a contentious debate over four items on the unfinished list of the IMF loan program: the first is the IMF’s demand for an early increase in the central bank’s interest rate to reflect general inflation;

the second is an adjustment to the exchange rate to take into account withdrawals to the sanctioned Afghanistan; the third is written assurance from friendly nations for the external financing gap; and the fourth is the continuation of the IMF loan program. The Pakistani government and the IMF are unable to agree because of the fourth item.

Investors worried over delay in a tax refund

Tax refunds totaling PKR 93 billion are owed to multinational firms with operations in Pakistan. The group that advocates for foreign investors have requested clarification on this issue from Pakistan’s income collection administration.

The government would refund billions of Pakistani rupees in taxes to companies including Procter & Gamble Pakistan, K-Electric, and many more, according to the news outlet Dawn. Hub Electricity Company Limited would obtain the greatest sales tax refund, totaling PKR 9 billion. K-Electric would receive PKR 8.6 billion, while Procter and Gamble Pakistan Ltd. will make PKR 2.4 billion. There are also several Pakistani companies on the list that owe each other more than PKR 3 billion.

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