The International Monetary Fund (IMF) has placed “tough conditions” on poor Pakistan to agree if it is to raise billions of dollars in aid, Pakistani Prime Minister Shehbaz Sharif said.
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The IMF will give more than $1.1 billion after a successful ninth review of Pakistan’s economy. This would also pave the way for bilateral loans from other countries and institutions. The IMF wants Pakistan to take measures to increase government revenue.
The IMF will share nine tables on macroeconomic and fiscal frameworks with the Pakistani authorities. If they come to an agreement before February 9, they will sign a staff-level agreement.
Pakistan will have to make some tough decisions to make sure the IMF is happy with the country’s handling of the economic crisis before the global lender can send the money.
The IMF expects Pakistan to take steps to close the huge fiscal gap, the News International newspaper reported citing unnamed sources.
One proposal is to increase the petroleum levy by 20-30 rupees per litre. This would push the current 50 rupees up to 70-80 rupees, the newspaper reported.
Another consideration is to levy a 17 percent Goods and Services Tax (GST) on Petroleum, Oil, and Lubricant (POL) products. “… Or raising the GST rate by 1 percent from 17 to 18 percent through a presidential decree,” the paper reported, citing unnamed sources.
Pakistan could consider raising the federal excise duty on sugary drinks from 13 percent to 17 percent through a mini-budget.
The Federal Board of Revenue of Pakistan has proposed increasing the excise tax on cigarettes.
The IRS has requested information on the assets of “civil servants” from grades BS-17 to BS-22. This information will be shared between the Federal Board of Revenue and banks. BS-17 to BS-22 have a relatively higher salary than the ranks below.
Pakistan’s central bank said on Friday that its foreign exchange reserves fell 16.1 percent to $3.09 billion at the end of the last fiscal week, the lowest level in nearly 10 years.
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