Negotiations between Pakistan and the International Monetary Fund (IMF) regarding the release of the final portion of $1.1 billion under an agreement have made significant strides forward.
Both parties are nearing a consensus on a proposed plan. Sources within the Finance Ministry have disclosed that Pakistan has committed to implementing timely increases in electricity and gas tariffs, along with the removal of various tax exemptions.
According to these sources, there are plans to further raise electricity tariffs, possibly starting from July 1st. Additionally, mechanisms will be established for regular adjustments, whether monthly, quarterly, or annually, to ensure that the costs are adequately covered.
There is a concerted effort to eliminate tax exemptions across various sectors, including income tax, sales tax, and import duties.
The intention is to gradually phase out the current annual tax exemptions, which are estimated to total Rs2.239 trillion, while simultaneously working towards enhancing transparency in the economy to boost tax revenue.
The government has also made a commitment to refrain from introducing any new tax exemptions or amnesty schemes in the forthcoming budget. However, exceptions will be maintained for foreign diplomatic missions and non-profit charitable organizations.
The IMF has emphasized the importance of safeguarding beneficiaries under the Benazir Income Support Programme (BISP), prompting the government to pledge an expansion of the program’s coverage by June.
The IMF has stressed the necessity of ongoing reforms to ensure economic stability. This entails maintaining a stringent monetary policy and adhering to a market-oriented exchange rate regime.
The progress achieved in the economic review discussions signifies a concerted effort by both Pakistan and the IMF to address crucial economic challenges and pave the way for sustainable growth and stability in the country’s economy.
Upon the successful conclusion of the negotiations, Pakistan will receive the final tranche of funds following approval by the IMF’s Executive Board.
