Pak officials take loans, forget pledges: IMF

 

WASHINGTON: International Monetary Fund (IMF) Pakistan Mission chief Jeffery Franks has said that Pakistani officials in times of financial crisis take loans and forget their pledges as soon as they are out of the crisis.
In a TV interview, Jeffery Franks said that several IMF programmes with Pakistan could not succeed due to the fact that when officials face financial difficulties, they make all sorts of pledges but as soon as they get out of the crisis they forget to fulfil them. He said this practice must end now.The IMF Pakistan Mission chief said it seems the new government will meet the promises made relating to reforms, particularly in the energy sector and taxation system.

IMF sees surge in Pak economy

WASHINGTON: The International Monitory Fund (IMF) says the Nawaz Sharif government has cut the load shedding hours and Pakistan has seen a surge in its economy.

The IMF said the government has collected more taxes and it seems economic reforms will continue.

Talking to Geo News, IMF Pakistan Mission head said: “We are approving loan since the Nawaz- government seems resolved to introduce economic reforms”.

He said that in the past IMF programs with Pakistan could not succeed as the governments in Islamabad got loans in difficult times but forgot their promises.

IMF for expanding tax circle, ending relaxations

KARACHI: International Monetary Fund (IMF) on Saturday asked Pakistan to create better atmosphere of business, expand tax circle and abolish SROs about tax relaxation.

The IMF expressed satisfaction over the structural reforms initiated by the present government. However, for further improvement in reforms it asked the government to take tax base to 0.5 percent of country’s GDP along with removing hurdles in the way to make investment, so that the pace of financial ratio could be increased by getting maximum investment.

The IMF further asked the Pakistan government to abolish concession in tax and also abolish SROs in this regard. The IMF also asked the government to reduce deficit and bring it between 5.5 percent and 5.75 percent of the GDP.

The sources said that the government was seriously thinking to implement proposals of IMF and it was expected that the announcement of implementing these proposals would be made in the financial budget 2014-15 which would be presented in June. The IMF said that there seemed improvement in Pakistan economy totally and it was expected that the ratio of GDP would be increased from 2.8 percent to 3.1 percent in the current financial year.

IMF wants tough money laundering laws

ISLAMABAD: While appreciating the rebound of Pakistan’s economic performance which shows growth has picked up and inflation reduced, the International Monetary Fund (IMF) has asked Islamabad to introduce amendments to the Anti-Money Laundering (AML) law by end of September for combating tax evasion in the country.

Under the US$6.67 billion bailout package for Pakistan’s struggling economy, the IMF has made checking money laundering as part of structural benchmarks.

In order to enable the use of AML tools to combat tax evasion, Pakistani authorities started the preliminary work to include tax crimes in the Schedule of Offences of the 2010 Anti-Money Laundering Act (AMLA). A list of serious tax offences is being identified.

The IMF has explained in its Technical Memorandum of Understanding that the “relevant tax laws” in the structural benchmark on “enactment of amendments to the relevant tax laws and submission of amendments to the AMLA for end-June 2014” is defined by incorporating Income Tax Ordinance 2001; the Federal Excise Act 2005; the Sales Tax Act 1990; the Customs Act 1969; and any other relevant law.

Pakistani authorities also committed to raise power tariff for erasing the monster of circular debt. The gas tariff will also be raised in the months ahead.

“In order to ensure that serious tax crimes are predicate offences to money laundering, we will enact amendments to the relevant tax laws and submit amendments to the AMLA to parliament by end-September 2014 (new structural benchmark). We will also ensure that the AML framework is properly implemented to ensure detection of potential cases of abuse of the investment incentive scheme to launder criminal proceeds. Proper guidance will be provided by the Financial Intelligence Unit to financial institutions and the FBR by end-June 2014,” the staff report of the IMF released on Friday states.

It states that Pakistan continues to face important security and political challenges. Taliban-related violence has picked up in recent weeks in different parts of the country, complicating public administration in some areas.

The PML-N-led national government retains a strong commitment to their economic reform programme, but political resistance is strong, particularly to greater exchange rate flexibility and to some difficult structural reforms. The authorities also confront challenges in their administrative capacity in carrying out many complex reforms simultaneously.

According to the IMF, risks to outlook are to the downside and main risks include security conditions in Pakistan remain difficult, with significant terrorist activity, as well as sectarian violence and urban criminal activity which could depress investment and growth.

The new structural benchmarks are included as part of the IMF programme to conduct a diagnostic study of the regulatory framework of the power sector and prepare an interim report (end-April 2014) and enact amendments to the relevant tax laws.

The structural benchmark on the enactment of legislation to enhance central bank independence is being shifted from end-March to end-June 2014.While there is room for improvement in some areas, the IMF states, overall the authorities have made commendable progress in stabilising the economy and launching important structural reforms.

Core programme targets on fiscal consolidation and international reserves have been met, and the authorities have undertaken corrective action to address missed performance criteria.Progress is being made on the structural reform agenda, but determination and perseverance will be required in the face of political and administrative constraints before lasting results can boost the economic growth and stability.

Risks remain high and are tilted to the downside. The government has taken difficult measures to address macroeconomic imbalances and initiate structural reforms, but overall vulnerabilities remain, particularly in the external sector, states the IMF.

External shocks, such as oil and food price volatility, interruption in remittance inflows, or delays in realisation of official and private inflows could put further pressures on the balance of payments. The difficult security situation constitutes the principal domestic downside risk. Risks to policy implementation could also dim the outlook, the IMF report concluded.