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IMF Expects Review Agreement with Pakistan ‘Within this Week’

Global lender’s managing director says country’s ‘perennial problem’ is tax collection, which should be boosted to at least 15% of GDP

by Staff Report

Photo courtesy IMF

International Monetary Fund (IMF) Managing Director Kristalina Georgieva on Wednesday told Bloomberg that the global lender expected to finalize an agreement on the upcoming review of the $3 billion Standby Arrangement (SBA) with Pakistan “within this week.”

In an interview from Singapore, she said the agreement was due “any day now,” adding that Pakistani authorities—particularly interim Finance Minister Shamshad Akhtar—deserved credit for speaking to the problems facing the Pakistani economy in a “difficult” time. “In Pakistan, the perennial issue is tax collection,” she explained. “The country today collects 12 percent tax-to-GDP; we’re saying it has to be at least 15 percent to have the revenues to sustain the functioning of your economy,” she said. “So, please, for the people in Pakistan that can pay taxes, collect it from them,” she added.

The IMF review mission arrived in Pakistan earlier this month and has since conducted meetings with various government departments, including the Federal Board of Revenue, the Finance Division, and the Securities and Exchange Commission. In its discussions with state officials, the global lender has stressed on expanding the tax net, with a particular focus on the real estate and trading sectors.

Reportedly, the IMF has also sought stringent measures against money laundering and suspicious transactions and has advised Pakistan against creating a group of “preferred investors” under the Special Investment Facilitation Council to ensure transparency and accountability in its business deals.

The IMF mission is due to depart Pakistan today (Wednesday), and the successful conclusion of the first quarterly review under the SBA would enable Pakistan to receive a second tranche of $710 million early next month.

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