The federal government has prepared a strategy to reduce circular debt of Pakistan following the conditions tabled by International Monetary Fund (IMF) to revive $7 billion EFF
ISLAMABAD: The federal government has prepared a strategy to reduce circular debt of Pakistan following the conditions tabled by International Monetary Fund (IMF) to revive $7 billion Extended Fund Facility (EFF) stalled for months, the sources informed.
According to details, the Ministry of Finance prepared strategy for the repayment of country’s circular debt as the International Monetary Fund (IMF) and Pakistan would hold another round of technical talks for revival of stalled loan programme.
Sources told that Rs 543 billion plan has been prepared to eliminate circular debts in the energy sector. “In this regard, the government would also provide Rs 241 billion and Rs 302 to Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL),” they claimed.
Sources further said that the amount received by the Sui Southern will clear the debt of Oil & Gas Development Company (OGDCL). Moreover, they added, the SSGC would pay Rs 8 billion to private companies and Government Holdings Private Limited (GHPL).
Meanwhile, the Sui Northern Gas would pay Rs172 billion, Rs90 billion and Rs40 billion to Oil & Gas Development Company (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holdings Private Limited (GHPL), respectively.
Earlier on February 2, it was reported that the International Monetary Fund (IMF) expressed concern over the circular debt in the gas sector of Pakistan.
“IMF delegation expressed reservations over the existing circular debt in the gas sector and stressed bringing immediate reforms to the energy sector,” said sources.
The Fund officials insisted Petroleum Division’s officials take action against gas theft besides taking necessary steps to stop technical losses in the sector.
International Monetary Fund (IMF) has asked Pakistan to impose roughly Rs600-800 billion in additional taxes in the second round of talks to revive $7 billion Extended Fund Facility (EFF).
During the meeting, the Fund set tough conditions for additional measures that included imposing roughly Rs600-800 billion in additional taxes.
The sides failed to fill the gap in talks over their versions with regard to the economic data, sources said.
Policy talks between the sides have been delayed as conclusion of the technical talks lingering on. “The policy talks now expected to begin on February 07 instead of 06”, sources said.
Pakistan and the IMF officials have differences over the figures of budget deficit and the tax data. The government officials have failed to convince the IMF over their point of view, sources said.
IMF officials said that the tax revenue of Pakistan will likely remain 840 billion rupees down, while the Pakistani delegation keeps the figure down by 450 bln rupees.
Pakistan’s economic team have to convince with the IMF delegation with regard to the economic data in a meeting today, sources added.
Sources yesterday said that Pakistan has left no option other than hiking the prices of petrol, diesel, electricity and gas. The final decision for the toughest decisions will be taken by the prime minister.
The federal government is also expected to take the other political parties into confidence regarding the tough economic decisions in the upcoming all-parties conference.
In the four-day technical talks, the federal government and the IMF mission held discussions to reduce the budget deficit. Different plans were discussed to reduce the burden of external debt payments.
Sources said that the government presented a plan to reduce Rs611 billion in budgetary expenditures. Moreover, the government also agreed on limiting the subsidies to up to Rs340 billion.
The details of the mini budget also came into discussion. The IMF demanded to increase the sales tax rate from 17% to 18%.
They also deliberated on ending discounted sales tax rates for different sectors.
It was learnt that the authorities will end discounted sales tax worth Rs110 billion for the different sectors, moreover, the government also mulled over introducing a new clause in the mini budget for the imposition of flood levy.
It is pertinent to mention here that the IMF officials have tabled tough demands before releasing $1 billion dollar tranche during the second day of talks with the Pakistani government to unlock stalled funds from a $7 billion bailout.