islamabad [Pakistan], The International Monetary Fund (IMF) on Saturday (February 4, 2023) concluded the first round of “difficult talks” with cash-strapped Pakistan and said the fund will share nine tables – including the macroeconomic and fiscal framework – of Pakistani with officials which will pave the way for holding policy-level talks next week, Geo News reported.
If Pakistan and the IMF reach a consensus by February 9, they will sign a staff-level agreement. An IMF delegation is in Pakistan to resume stalled talks for releasing a $1 billion loan.
Officials have largely revised the macroeconomic framework shared with the IMF under which real GDP growth is projected to slide from 5 percent to 1.5 to 2 percent, while inflation will average 12.5 percent to 29 percent. is going to increase till In the current financial year, reported Geo News.
The IMF team has pointed out that nominal growth (real GDP growth rate and CPI-based inflation) is projected to cross the 30 percent mark, hence the Federal Board of Revenue of Pakistan’s (FBR) tax-to-GDP ratio Geo News According to the report, even if it achieves the envisaged annual tax collection target of Rs 7,470 billion, it is set to decline.
An increase in the FBR’s tax collection target is on the cards, but its exact level of additional taxation will be determined after receiving nine tables drawn up by the IMF mission, which will be shared with Pakistani authorities on Monday as part of a draft memorandum . Fiscal and Economic Policies (MEFP).
“IMF’s prescription suggests toughest options on taxation and non-taxation fronts to fill the yawning fiscal gap. Various proposals are being considered, including increasing the petroleum levy by Rs 20-30 per liter from the existing These include maxing out the limit of Rs 50 per liter to the level of Rs 70-80 per liter or levying 17 per cent GST on POL products or raising the GST rate to 17 to 18 per cent through a Presidential Ordinance,” sources told the news. Confirmed by International.
On the other hand, IMF has called for additional taxation on a qualitative, adequate and sustainable basis which should be done in an irreversible manner.
The FBR has prepared a proposal to increase the Federal Excise Duty (FED) on cigarettes from Rs 6,500 per 1,000 cigarettes. This indicates that the government will increase the Fed rate by Rs 0.50 per stick, hence the packet rate will increase by Rs 10, Geo News reported.
There is another proposal through the mini-budget to increase the FED rate on sugary beverages to 17 per cent from the current rate of 13 per cent. However, the FBR is facing immense pressure from the diplomatic corps in this regard.
Another factor is that sugar is being used in these beverages, so even the sweetener owners who enjoy political connections irrespective of political divide will make a last ditch effort to stop this proposal at any stage, Geo News reported. .
Measures like a flood levy of 1 per cent to 3 per cent, bringing in higher profits earned by banks through the levy and raising the rates of withholding rates are also on the cards.
Meanwhile, FBR has notified the Declaration of Assets of Civil Servants Rules, 2023, under which information about assets of civil servants from grade BS-17 to BS-22 will be shared between FBR and banks, Geo News told.
As per Statutory Regulatory Order (SRO) 80(I)/2023 issued by FBR, the Board will share a simplified or abridged version of the declaration, made by a civil servant, based on the areas agreed with the State Bank of Pakistan. His electronic declaration filed with the FBR, reports local media.
The ongoing talks between the two sides began on 31 January. has been termed “tough” by Prime Minister Shehbaz Sharif,
Shahbaz, speaking at a meeting in Peshawar on Friday, said the IMF was giving “tough time” to Finance Minister Ishaq Dar and his team, hinting at tougher measures to revive the stalled loan programme.