Pakistan aims to generate PKR 215 billion in new taxes to help seal IMF deal

Business Monday 26/June/2023 10:24 AM
Pakistan aims to generate PKR 215 billion in new taxes to help seal IMF deal

Islamabad: Pakistan's government aims to generate an additional Pakistani rupees (Rs) 215 billion in taxes and cut spending by Rs 85 billion in the next fiscal year in order to seal International Monetary Fund (IMF) deal, Dawn reported.

The government has made changes according to the measures that were dictated by the IMF in a last-ditch effort to secure critical funding. "Pakistan and IMF had detailed negotiations for the last three days as a last effort to complete the pending review," Finance Minister Ishaq Dar told the house as he unveiled the changes on Saturday.

But the Pakistan government has not reduced the federal development budget or the salaries and pensions of government employees.

This will revise the government's revenue collection target to Rs9.415 trillion and put total spending at Rs14.48 trillion, he said. The share of the provinces would be increased to Rs5.39 tr from Rs 5.28 tr, reported Dawn.

Dar said the government had also lifted import restrictions enforced in December to cut the current account deficit, which has been one of the major concerns by the IMF to release the funds.

He said the allocation for the Benazir Income Support Programme was also revised from Rs450bn to Rs466bn for FY24. Besides, the petroleum development levy would be raised from Rs50 to Rs60 per litre.

The changes in the budget came a day after Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris.

The Fund's ongoing loan program agreed in 2019 is set to expire on June 30. Under the USD 6.5 billion facility's ninth review, negotiated earlier this year, the country has been trying to secure USD 1.1 billion of funding stalled since November.

Earlier, IMF said that without changes in the budget, the staff-level agreement with the IMF cannot be achieved.

Pakistan and the IMF are making efforts to evolve a broader agreement on the budgetary framework which, if struck, could pave the way for approval of the budget for 2023-24 with revisions, including jacking up the FBR's tax collection target and slashing expenditures, The News International reported.

A top official privy to the ongoing negotiations between Pakistan and the IMF held virtually from Islamabad and Washington on Friday, said: "The Pakistani side shared the revised budgetary estimates for next fiscal year with the IMF but so far a broader agreement is yet to be achieved."