ISLAMABAD
The economic team of the government briefed the International Monetary Fund (IMF) about further steps taken for the staff-level agreement.
During virtual talks between Pakistan and the IMF, the latter was briefed about tax measures through amendments to the budget. “Rs438 will be collected under the head of taxes in the budget,” the economic team briefed the IMF.
The IMF was also informed about the decision of the State Bank to lift the ban on imports and the amendments to the Finance Bill. “We are close to a staff-level agreement with the IMF,” the finance ministry officials said.
Meanwhile, Pakistan has hinted at addressing the concerns put forward by the International Monetary Fund (IMF) in the federal budget for FY2023-24. Pakistan’s efforts are underway to restore the stalled loan programme with the IMF and the breakthrough is likely within two days.
According to sources, Pakistan has decided to address the IMF’s concerns in the budget. Sources claimed that Pakistan has started changes upon the demands of the IMF and changes are being made in the budget speech. Pakistan has once again provided working to the IMF on $6 billion in external financing.
Sources say the IMF’s demand for collecting more than Rs215 billion from the people has been accepted by the federal government. The IMF has asked Pakistan to abolish subsidies for the textile sector and increase electricity tariffs, the sources said.
According to sources, the IMF had also demanded an increase in the petroleum levy, suggesting that the authority to increase the petroleum levy should be given to the Cabinet instead of the Parliament.
In addition, the IMF had demanded a reduction in subsidies and further reduction in federal government expenses, as well as a limitation on electricity subsidies. Earlier on Saturday, Finance Minister Ishaq Dar said that the federal government had introduced a number of changes to its fiscal year 2024 budget in a last-ditch effort to clinch a stalled rescue package with the IMF.
“Pakistan and the IMF had detailed negotiations as a last effort to complete the pending review,” he said while addressing the National Assembly. “For the fiscal year starting next month, the federal government will raise a further Rs215 billion in new tax and cut Rs85bn in spending, as well as a number of other measures to shrink the fiscal deficit,” he said.
“For the past few months, the nation has been questioning whether the IMF’s ninth review would be successful or not,” he said, adding that he wanted to take the people into confidence on the matter.
He said that the government had completed all prior actions and achieved compliance on the Fund’s demand, but Pakistan’s case could not be put in front of it due to the external financing gap.
Dar said that it had been decided between Pakistan and the IMF for a “last final push” to move the review forward, following which detailed negotiations were held with an IMF delegation in the last three days to complete the ninth review. The finance minister said the suggestion for Rs215bn in new taxes came about as a result of the talks, adding that care was taken that the tax burden would not fall on the poor and weak segments.
He further said the Rs85bn spending cut would also be achieved without any curtailment in the federal development budget or the salaries and pensions of government employees.
Providing updated figures for the FY24 budget, Dar said the revenue collection target for the Federal Board of Revenue was increased to Rs9,415bn from Rs9,200bn. The share of the provinces would be increased to Rs5,399bn from Rs5,276bn. The target for the federal government’s total expenditure was increased to Rs14,480bn from Rs14,460bn. “Due to all of the above measures, there will be an improvement in the overall budget deficit,” Dar said.
The finance minister said the petrol levy will be raised from Rs50 to Rs60 and will be capped at the new ceiling for any future changes. He also announced the lifting of restrictions on all imports enforced in December in a bid to cut the current account deficit, which has been one of the major concerns by the IMF to release the funds. Money allocated for cash handouts to the poor was also revised from Rs450bn to Rs466bn for the fiscal year 2024, Dar said.
