Finance Minister of Khyber Pakhtunkhwa Taimoor Khan Jagra on Friday transferred to the ministry of Fund his administration inability to secure this year’s provincial surplus key pre-agreed requirement for revival of the IMF program.
The provincial surplus is amount provinces are not spend at the expense of funds transferred to them by the federal government.
federal government It was in july agreed in Memorandum of Economic and fiscal policy signed with The IMF will present a memorandum of understanding signed by the provincial governments for a joint provision of about 750 billion rupees. cash excess towards the center.
KP government later signed a Memorandum of Understanding, effectively agreeing run surplus, after federal government assured that this would solve the problems of the province.
These concerns were related to the financing of ex-Fat and other issues, including the transfer of Federal program Sehat Sahulat for tribal areas along with its funding to the center, funds for tribal areas and regular payment of net Heidel profit.
“The objectives and terms of the Memorandum of Understanding will depend on full degree of Income to the KP budget of The province receives or generates Rs 1.322 trillion,” Jagra said. in a letter to the Minister of Finance Miftah Ismail of that time.
However, in his letter to Ismail today – just three days before the IMF board scheduled meeting on August 29 (Monday) for payment approval of $1.18 billion to Pakistan under the Enhanced Financing Facility (EFF) – Jagra argued that “it will next to the point of impossibility” for provincial government to ensure surplus without permission of problems noted earlier.
Among the reasons behind KP inability to run excess, he also indicated out heavy financial damage to the province’s infrastructure due to rain and flooding.
Jagra reminded the federal minister that KP has signed a Memorandum of Understanding”in the more national interest, however, we were unable to get a time for meeting with in minister or secretary despite repeated requests.
He listed four problems in a letter that says government should decided budget appropriations for ex-fat who, in absence of en updated NFC awarddecided at the discretion of federal government.
He also reminded government to commit monthly transfers of net profit hydel according to terms specified in Memorandum of Understanding signed between the federal and provincial governments in 2016.
Jagra also emphasized need for revival of National Financial Commission Award immediately.
He said the federal government must “also commit turn on immediately and resolve Another financial questions with government of Khyber Pukhtunkhwa.
“According to our estimates, the overall impact of failure to address these issues will actually result in an unsecured liability of Rs 100 billion. in Khyber Pakhtunkhwa budget,” He wrote in letter.
provincial minister said the situation had become “more difficult due to severe flooding causing damage in Swat, D.I. Khan and Tank, and cost in terms of rescue, assistance, rehabilitation and building back Most likely run in tens of billions.”
Under current circumstances and without permission of the questions mentioned earlier will next to the point of impossibility for KP to leave a surplus, he concluded.
Road to agreement with the IMF
Pakistan joins IMF program in 2019 but only half funds have been disbursed to date as Islamabad has struggled to keep the targets on track.
last payment was in February and next tranche was to follow a review in March, but government of pushed out prime minister Imran Khan introduced costly fuel price caps, who threw away the fiscal targets and program off track.
new coalition government It has removed in price caps, with prices for gasoline and diesel fuel are rising up by as much as 66% and 92% in over month.
21 June Pakistani authorities and IMF staff mission reached an understanding on in current fiscal yearfederal budget to revive the stalled credit program after the authorities pledged to receive 436 billion rupees. in more taxes and a gradual increase in the tax on oil to 50 rupees per litre.
As a result, IMF staff in The statement acknowledges that it is important progress was made over federal budget. Based on on while Pakistan provided a written commitment from the provinces to provide 750 billion rupees. in cash surplus to the Center to keep the budget deficit within 4.9% of GDP and help create a primary budget surplus of 152 billion rupees.
Moreover, Pakistan is now required increase the electricity tariff by 7.91 rubles per unit, except for direct pass-through of monthly fuel cost adjustments in timely fulfillment of IMF requirements.
June 28 Ismail announced that Pakistan received the Memorandum of Economic and Fiscal Policy (MEFP) from the IMF for combined seventh and eighth reviews.
The revised MEFP was founded on budget measures announced Ismail in its windingup speech on revised budget in National Assembly providing over 1.716 trillion rupees (2.2% of GDP) of fiscal adjustment, mainly due to taxation, including 10% super tax on 13 industries and personal income tax covering monthly income over Rs 50,000 per month.
it on top of a fixed tax regime for sectors like retailers, merchants, jewelers, builders, restaurants, automobile as well as property dealers and so on on.
This is the biggest fiscal adjustment in one year it would be help turnover of about 1.6 trillion rubles of primary deficit – the difference between income and expenses, excluding interest payments – during current fiscal year with a surplus of Rs 152 billion next year.
