- The IMF, Pakistan, was to start talks in next week’s policy.
- The two sides are ready to make key adjustments to the tax framework.
- The variation in income targets on macroeconomic number adjustments.
Islamabad: The International Monetary Fund (IMF) opposed the government’s decision to increase RS1.25 Billions of commercial banks to settle the payment of the circular debt of monsters in the power sector, The news reported on Saturday.
The lender based in Washington also requested how the Central Electricity Purchase Agency (CPPA) would finance the amount of interest and the main one if the electricity request decreases in the coming years.
The development comes as the IMF and Islamabad have again presented to provides key adjustments to the country’s macroeconomic and budgetary framework for the country’s 2024-25 financial year with the next talks at the level of the policy, planned to start on Monday, will finalize these adjustments.
Meanwhile, addressing the publication, the main official sources have confirmed that the IMF had not accepted any decision for a tax reduction, in particular the general sales tax (TPS) presented by the electricity division.
The two parties have largely accomplished a technical series of talks and now the two parties will start talks at next week’s policy. The parley in terms of politics will start on Tuesday and should end on Friday.
Friday, the two parties discussed the macroeconomic framework, with the possibility of revising the projection of the real growth of GDP and inflation based on the IPC.
The government has considered a real GDP growth rate of 3.5% and inflation based on the IPC at 12.5% for the current financial year.
In the wake of emerging realities on the macroeconomic front, the performance of the large -scale manufacturing sectors (LSM) and agriculture have remained below the expected levels, and it is now mainly included in the services sector.
Thus, the real GDP growth could hover by around 1 to 2%. The performance of major crops should be lamentable and corn production will also remain lower than the desired target. Climate change has had a negative impact on the performance of the agricultural sector, and livestock can only play an important role in the transformation of its growth into a slightly positive trajectory. If it cannot operate until the desired brand, the growth of agriculture could remain negative during the current financial year.
Among the major crops, cotton production has experienced a major bump. Now, all eyes are focused on the yield of wheat, which could remain negative compared to the exceptional harvest of last year. Wheat production could remain from 26.5 to 27 million tonnes. LSM growth has transformed into a negative trajectory, so the service sector will remain the main engine of growth for the current exercise.
On IPC -based inflation, the government was considering a 12.5% inflation target, which had witnessed a major drop and affected 1.6% on a monthly basis. IPC inflation should oscillate around 6 to 6.5% for the current year.
With the possibility of review in macroeconomic numbers, will have a major impact on the budgetary framework, so that the targets on the income side could have to be adjusted accordingly, keeping in view for new emerging realities on macroeconomic fronts.