IMF demands to do more for a billion dollar

The Fund asked to government to collect full year tax target of Rs 8.3 trillion in the second round of talks to revive $7 billion Extended Fund Facility (EFF) stalled for months

ISLAMABAD: The International Monetary Fund (IMF) has demanded to do more from Pakistan to release $1 billion dollar. It asked Pakistani government to impose roughly Rs 600-800 billion additional taxes, hike petroleum products and gas prices.

The Fund, however, asked to government to collect full year tax target of Rs 8.3 trillion in the second round of talks to revive $7 billion Extended Fund Facility (EFF) stalled for months, the sources claimed.

In this connection, the Federal Revenue Board (FBR) held a second round of technical talks with IMF mission, led by Mission Chief to Pakistan Nathan Porter, on the ninth review.

The country had secured a $6 billion IMF bailout in 2019, which was topped up with another $1 billion last year, but the lender then stalled disbursements in November due to Pakistan’s failure to make more progress on fiscal consolidation and economic reforms.

During the meeting, the Fund set tough conditions for additional measures that included imposing roughly Rs600-800 billion in additional taxes.

Sources told that Pakistan was willing to impose taxes to the tune of Rs 200 billion through a ‘mini-budget’, while the Fund pressed Islamabad to foist over Rs 600 billion additional taxes.

The lender also demanded the government increase tax collection to 1 percent of Gross Domestic Product (GDP). Sources claimed that the Fund demanded the government fix next fiscal year’s tax collection target at Rs 8.3 trillion.

Sources further claimed that the IMF also demanded to end phase-wise incentives of sales tax. It also demanded to increase sales tax on petrol from 11 percent to 17 percent, sources said, adding that Fund demanded to end Rs 110 billion relief granted to textiles and other industries.

Earlier in the day, it was reported that the federal government assured the Fund of a hike in the power tariff.

According to sources, the government will increase the power tariff by Rs 6.79 per unit and it will increase stepwise in the next five months. The power division briefed the IMF team about the plan to reduce the circular debt by increasing electricity prices and preventing power theft and line losses.

It is pertinent to mention here that an IMF mission arrived in Islamabad on January 30 to discuss the stalled ninth review of the $7 billion Extended Fund Facility (EFF).

Sources told that Pakistan and the Fund will hold technical talks for the first four days, wherein economic data from different departments will be reviewed.

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