Rs 976130000000 scam in Pakistan: Shehbaz Sharif left red faced after IMF demanded account for every penny

Pakistan, which regularly seeks help from the International Monetary Fund (IMF), has shown some discrepancies, says report. This entire matter involves an amount of $11 billion (approximately Rs. 97,613 crores). Now, the IMF has asked Pakistan to publicly disclose and reconcile the $11 billion discrepancy in its trade data. This demand comes after discovering significant discrepancies in data reported by various government bodies over the past two fiscal years. According to The Express Tribune, this inquiry by the IMF has raised questions about the reliability of Pakistan’s external sector indicators. The accuracy of the data used to calculate the country’s current account surplus has also come under question.

IMF seeks answer

The Express Tribune reported, citing government sources, that the Pakistan Revenue Automation Limited (PRAL) provided import figures for the 2023-24 fiscal year that were $5.1 billion below those of the Pakistan Single Window (PSW). This gap widened to $5.7 billion in the following fiscal year. PSW’s import data is considered more comprehensive and even exceeded the State Bank of Pakistan’s (SBP) freight-on-board-based import data, which is used to calculate the country’s external balance.

The IMF contacted the Pakistan Bureau of Statistics (PBS) before the start of its review talks. It subsequently held discussions with the Ministry of Planning and Development. During these meetings, the IMF urged Pakistan to adopt a clear communication policy to explain discrepancies in trade data and changes in methodology. This was intended to “prevent mistrust between the government and data users.”

Did Pakistan admit to its wrongdoing?

According to the report, Pakistani officials acknowledged that the trade data submitted to the Geneva-based International Trade Centre (ITC) was not comprehensive. They acknowledged that some import figures were missing. They suggested that this underreporting was a result of the transition of the main trade data source from PRAL to PSW.

PRAL operates under the Federal Board of Revenue (FBR), while PSW is an independent legal entity, staffed mostly by customs officials. PSW data covers all import entries, including those related to trade facilitation schemes. In contrast, PRL’s dataset excluded several categories, particularly those related to raw materials.

These discrepancies came to light when officials began investigating mismatches between trade data reported by Pakistani importers and Chinese exporters. Prime Minister Shahbaz Sharif formed a committee to investigate these discrepancies. A review of five years of data revealed that PBS was using an outdated query system to obtain trade data from PRAL, leading to years of underreporting.

Did he want to present a false picture of the economy?

This situation presents a major challenge for Pakistan’s economy. When there are such large discrepancies in trade data, it becomes difficult to understand the country’s true economic situation. International institutions like the IMF rely on accurate data to provide accurate advice and financial assistance to countries. In this regard, Pakistan urgently needs to improve its data collection and reporting processes to prevent such problems in the future. Maintaining the confidence of the international community is crucial not only for the IMF but also for other international financial institutions and investors considering investing in Pakistan.