With an IMF deadline looming before it, the government is in a rush to complete the necessary obligations imposed on the country by the global monetary fund. One of the conditions placed—which has to be completed before the IMF executive board meeting scheduled for March 24th—is legislation for withdrawal of corporate tax exemptions and instead increasing automatic electricity power tariff. Unless an extension of the deadline can be negotiated, the release of a $500 million tranche is at stake.
The meeting is three days away, and with nothing concrete to show for our obligations, the government is in a panic to complete the conditions immediately. The only way possible for us to comply with the necessary legislations is through an ordinance—an Act would be near impossible to squeeze through. The government is putting in place a mechanism for automatic electricity power tariff increases of about Rs5.36 per unit over the next 27 months through presidential ordinances. The ordinance is set to be called “Ordinance to Further Amend the Regulation of Generation, Transmission and Distribution of Electric Power Act 1997”, with the law enabling the government to streamline and impose electricity tariffs more easily. The government will, in all likelihood, also pass an ordinance for corporate tax returns in order to comply with IMF’s deadlines, in the upcoming days.
Yet, even as the government tries to complete IMF’s conditions last-minute, the burdens worsening the economy and increasing our dependence on the IMF are still in place and regurgitating. Pakistan’s reliance on foreign commercial loans has been increasing at a swift pace.
According to official data of the Economic Affairs Division (EAD), during July-February of fiscal year 2020-21, the government has received $7.208 billion total external inflows from multiple financing sources, which is 59 percent of annual budget estimates of $12.233 billion. While the government struggles to meet its deadlines in order to secure IMF releases, it must also remember its campaign promises and work to free the country from the burden of foreign commercial loans which put us in this position in the first place.
Source: https://nation.com.pk/21-Mar-2021/imf-deadlines