Policy-level talks between Pakistan and the IMF are ongoing and sources have claimed that the government may face new targets to secure the one billion dollar tranche.
According to the report, the talks between Pakistan and the IMF for the immediate release of the loan program tranche have entered a crucial phase. In the policy-level talks, FBR officials have provided the IMF with details of meeting the shortfall of Rs 605 billion in tax collections.
In the talks, there was a detailed discussion on agricultural income tax between the government’s economic team and the IMF. Sources have claimed that the government may face new targets to secure the one billion dollar tranche.
Sources said that negotiations will be held on the budget of the next fiscal year and reduction in circular debt. A proposal to impose a surcharge of Rs 2.80 per unit on electricity bills is under consideration. The possibility of imposing a carbon tax on petrol and diesel vehicles was considered.
Sources say that there will also be discussions on the proposal to impose carbon levy on coal-fired power plants, final discussions were held on the short-term plan for privatization. According to sources, discussions are also underway on tax reforms in the electric vehicle policy. A demand for more from Pakistan is expected in the technical talks. According to sources, officials briefed the IMF that there is a scope to collect Rs 300 billion in agricultural income tax. Sources said that a special session was held on the circular debt management plan. A plan has been prepared to borrow Rs 1,250 billion to reduce the circular debt. The government has proposed to borrow Rs 1,250 billion from banks at an interest rate of 10.8 percent. Sources said that a proposal to pay off the debt by imposing a surcharge of Rs 2.8 per unit on consumers is under consideration. There will be a special session on the implementation of NEPRA decisions. The National Fiscal Commission will discuss the distribution of revenue between the federation and the provinces. According to sources, provincial officials, the Ministry of Finance, and the FBI will meet at the World Bank office. RK members are participating, discussions are also scheduled with the delegation on amendments to the Sovereign Wealth Funds Act and regulations, Ministry of Energy and NEPRA officials will discuss circular debt and tariff rebasing with the delegation. According to sources, FBR officials have provided details of meeting the shortfall of Rs 605 billion in tax collections to the IMF. Negotiations between Pakistan and the IMF are ongoing and negotiations for the immediate release of the loan program installment have entered a crucial stage. The Ministry of Finance, FBR and Energy officials submitted their performance reports to the IMF last week, on which the IMF has informed the Pakistani authorities of its response.
In addition, the Ministry of Finance gave a briefing on the current account, fiscal deficit control and international financing, while details of reforms and increasing tax to GDP were also provided.
FBR officials also provided the IMF with a plan to meet the shortfall of Rs 605 billion in tax collections, while the IMF delegation discussed the proposal for relief for the real estate, property, beverages and tobacco sectors.
In addition, discussions were held on the proposal to reduce the tax burden on the salaried class in the next budget, while a plan to collect Rs 250 billion in taxes from various sectors including the retail sector was also discussed.
The Ministry of Petroleum and Energy briefed IMF officials that a loan of Rs 1,250 billion would be taken from commercial banks at an interest rate of 10.8% to reduce circular debt in the energy sector.
The IMF officials were also briefed on circular debt, reduction in electricity bills, recovery and reduction of line losses.
Sources say that the negotiations that began this week are of great importance. During this week, the IMF delegation will present new conditions and proposals in the negotiations. The next installment of the loan will be received only if the conditions and proposals are approved. The IMF will issue an initial statement after the policy-level negotiations are conclude
