The IMF visiting team has been conveyed that Pakistan had managed to collect Rs 870 billion tax in eight months to February 28, and its tax machinery would be getting Rs 1606 billion by June 30, the concerned official team believes it would be a reasonable level of tax collection to bear the current level of expenditure (Development and non development).
The government team also informed the IMF that Pakistan spent Rs 140 billion on power sector subsidy during the first eight months of the current fiscal year against the projected subsidy of Rs 208 billion and a lower level of subsidy for power sector indicates Pakistan's commitment to tighten its belt to keep the economic spending at an affordable level.
The IMF has been categorically stated that with better tax collection Pakistan's fiscal deficit will remain below 5 percent.
The fiscal deficit at one point in time in January was being projected much higher but with some improvement in key areas Pakistan now firmly believes that it was in a good position to keep fiscal deficit within a reasonable limit.
IMF team has also been informed that the federal share in development spending for the current fiscal year will remain close to Rs 180 billion.
Sources said IMF team headed by Adnan Mizari has been given assurance that the government of Pakistan will make up every possible effort to put its own house in order to avoid a collapse like situation on the economic front.
The government team informed the visiting IMF team that Pakistan's economy was well poised to get out of sluggish stage and that the upcoming fiscal year 2011-12 will bring good news for Pakistan government and the people who are faced with a difficult situation in the recent years for having high inflation and subsequent price hike at a time when per capita income in Pakistan was either stagnant or showing weak growth.
We have informed the IMF that Pakistan's economy was going to witness growth after passing through a difficult phase in the last three years due to external and internal shocks, The IMF has been given a complete picture of Pakistan's economy covering its tax collection, spending on power and other subsidies, possible missing of target of fiscal year of 4.7 percent, the power sector new policy, government borrowing from the central bank during July 2010-February 2011 and the government spending on safety net programme Benazir Income Support Programme (BISP) to give protection to the poor when inflationary pressure was mounting on them.
Pak-IMF ongoing talks will be completed by March 8. The positive outcome of these talks will help Pakistan secure at least one instalment of $1.7 billion of $11.3 billion standby arrangement (SBA) programme.
"We have given the IMF team detailed presentations on power sector, performance and subsidy level, tax collected as on February 28 and a target to be achieved by June 30, inflation level and its impact on Pakistani people, subsidy given to power sector in the first eight months of the fiscal year, and the fiscal deficit situation so that the fund could have a clear picture of what Pakistan is doing on economic front and where it would stand at the end of the current fiscal year", said a member of the official team.