International Monetary Fund IMF has decided to hold virtual meeting of its mission with Islamabad’s authorities ‘very soon’ in the aftermath of pandemic COVID-19.
This review talks through virtual meetings expected to take place by end of ongoing month or early May 2020.
IMF has prepared strategy to bridge the gap of revenues through not fully passing on benefits of decreased POL prices into international market with consumers.
It is now projected that the petroleum levy will go up by Rs 60 billion in next budget 2020-21 as there earlier projection to fetch Rs 429 billion into pre-COVID-19 scenario but now the IMF boosted up petroleum levy projection to Rs 489 billion.
The reason for jacking up levy projection because of FBR’s inability to generate desired revenues and for meeting pressing fiscal requirements.
A statement by the IMF official indicates that the approval of second review and release of third tranche worth $450 million on cards at anytime, however, some sources said that Islamabad would have to comply with certain crucial structural benchmarks such as submission of amendments into SBP act into the parliament.
The IMF envisages FBR target of Rs 6100 billion in FY 2021-22 and Rs 6956 billion in FY 2022-23.
The non tax revenue target has also slashed downward from Rs 1319 billion to Rs 1287 billion for end June 2020.
Non tax revenue target envisaged at Rs 1150 billion in next budget for 2020-21 from earlier projected amount of Rs 1207 billion.
The budget deficit is going to escalate further in the aftermath of COVID-19 Virus and it projected to touch 9.3 percent of GDP against earlier estimates of 7.3 percent of GDP, indicating that it would elevated up by Rs 1000 billion owing to shortfall in both tax and non tax revenues as well as overrun in expenditures.
The budget deficit will be hovering around 6.6 percent of GDP in next budget 2020-21 against earlier projection of 5.8 percent of GDP, said the IMF report. However, the budget deficit will curtailed at 5.1 percent of GDP for 2021-22 under the IMF program.
On macroeconomic front, the IMF staff projected GDP growth shrinking into negative and might touch -1.5 percent of GDP for the current fiscal year.
However, the Planning Commission and some independent economists do not agree to these projections and argued that the GDP growth rate would hovering around 2 to 2.5 percent for the current financial year.