The FBR has to prepare an MoU and agreement on GST input adjustments which would have to be endorsed by the Ministry of Finance with the support from the Ministry of Inter-Provincial Coordination (IPC). The agreements between the FBR and the provinces will be verified by the FBR task team based on official documents. However, the WB will conduct a review of the MoU with the provinces.
ISLAMABAD: The International Monetary Fund (IMF) said it will not support reorganizing the industrial sector’s tariff structure and reducing the circular debt of the cash-sucking energy sector, arguing that the plan posed fiscal risk rather than addressing underlying persistent issues, The News reported on Tuesday.
There is also a chance that the Fund may object to Pakistan International Airlines’ (PIA) unbundling, as the Rs260 billion settlement would cost Rs32 billion per year, and the restructuring of domestic debt could cost Rs16 billion.
The Washington-based lender has also not granted approval for the settlement of PIA’s domestic loans due to its connected fiscal burden.
The FBR has to prepare an MoU and agreement on GST input adjustments which would have to be endorsed by the Ministry of Finance with the support from the Ministry of Inter-Provincial Coordination (IPC). The agreements between the FBR and the provinces will be verified by the FBR task team based on official documents. However, the WB will conduct a review of the MoU with the provinces.
In the power sector, the IMF informed Pakistan that their circular debt management plan did not align with the Fund’s programme. The IMF emphasized the importance of the government focusing on broad-based reforms, such as lowering energy costs, improving compliance and reducing theft and line losses, ending captive power, and fixing the governance and management of the Discos, as well as keeping up with regular tariff adjustments.
An individual who was involved in discussions with the IMF told The News that Pakistan has previously used company dividends to settle circular debt in the energy industry.
