Pakistan and the IMF make efforts to reach a broader agreement on the fiscal framework (file)
Islamabad:
The Pakistani government aims to generate an additional Rs 215 billion in taxes and cut spending by Rs 85 billion in the next fiscal year to seal the deal with the International Monetary Fund (IMF), Dawn reported.
The government has made changes in line with measures imposed by the IMF in a last-ditch effort to secure critical funding.
“Pakistan and the IMF have been conducting detailed negotiations over the past three days as a last-ditch effort to finalize the ongoing review,” Finance Minister Ishaq Dar told the house when he unveiled the changes on Saturday.
But the Pakistani government has not cut the federal development budget or the salaries and pensions of government employees.
This will revise the government’s revenue collection target to Rs 9.415 trillion and bring the total expenditure to Rs 14.48 trillion, he said. The provinces’ share would be increased to Rs 5.39 trillion from Rs 5.28 trillion, Dawn reported.
Dar said the government had also lifted import restrictions imposed in December to reduce the current account deficit, which was one of the major concerns of the IMF to release the funds.
He said the allocation for the Benazir Income Support Program was also revised from Rs450 billion to Rs 466 billion for FY24. In addition, the petroleum development levy would be increased from Rs 50 to Rs 60 per litre.
The budget changes came a day after Prime Minister Shehbaz Sharif met IMF director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris.
The fund’s revolving loan program agreed in 2019 will expire on June 30. As part of the ninth review of the $6.5 billion facility, negotiated earlier this year, the country is seeking to secure $1.1 billion in funding that has stalled since November.
Earlier, the IMF said that without changes to the budget, the staff-level agreement with the IMF cannot be reached.
Pakistan and the IMF are working towards a broader agreement on the fiscal framework which, if reached, could pave the way for approval of the 2023-24 budget with revisions including boosting the FBR’s tax collection target and reducing expenses. That reports News International.
A top official who is aware of the ongoing negotiations between Pakistan and the IMF held virtually from Islamabad and Washington on Friday said: “The Pakistani side has shared with the IMF the revised budget estimates for the next fiscal year, but so far a broader agreement has yet to be reached.”
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