ISLAMABAD: The International Monetary Fund (IMF) is set to share nine tables with Pakistan on macroeconomic and financial frameworks, paving the way for policy-level talks next week as the two sides hold technical talks. The first round has been completed on Friday. .
If Pakistan and Washington-based creditors reach a consensus on the prescriptions to fix the economy by February 9, the two will sign a staff-level agreement.
Prime Minister Imran Khan has termed the ongoing talks between the two sides, which began on January 31, as “tough”.
Addressing a meeting in Peshawar on Friday, the prime minister said the IMF was giving “tough time” to Finance Minister Ishaq Dar and his team, who had taken tough steps to revive the stalled loan program. indicated.
Officials have largely revised downwards the macroeconomic framework and shared with the Fund that real GDP growth is expected to fall from 5% to 1.5% to 2%. while inflation is expected to increase from 12.5% to 29% on average. current fiscal year.
Tax collection target
The visiting IMF team has pointed out that nominal growth (real GDP growth rate and CPI-based inflation) is likely to exceed 30 percent so the Federal Board of Revenue of Pakistan (FRB) BR) is bounded by the tax-to-GDP ratio. Decline despite achieving annual tax collection target of Rs 7,470 billion.
An increase in the FBR’s tax collection target is on the cards but the exact level of additional tax will be determined after receiving nine tables prepared by the IMF mission under the draft fiscal memorandum on Monday. Will be shared with Pakistani authorities. and Economic Policies (MEFP).
“The IMF’s prescription suggests tougher choices on the taxation and non-taxation fronts to bridge the growing fiscal gap. Various proposals are under consideration, including increasing the petroleum levy by Rs 20-30 per liter from the current “These include raising the limit from Rs 50 per liter to Rs 70-80 per liter or levying 17% GST on POL products or increasing the GST rate by 1% to 17-18% through a presidential ordinance,” sources said. Confirmed while talking to JEE News.
All who know Finance Minister Ishaq Dar believed that he would try to resist the GST rate hike. His first priority will be to convince the IMF to increase the petroleum levy as its collection will remain in the federal government’s coffers. If the IMF does not agree, the second option would opt for a reduction in GST rates on POL products and the third option would allow 17 percent GST on POL products. His final choice would allow the implementation of the GST rate from 17 to 18 percent to 1% as it would be hyper-inflationary amid continued stagnation.
Mini budget
On the other hand, the IMF has called for additional taxes to be slapped on a standard, substantial and sustainable basis which should be done in an irreversible manner.
The FBR has prepared proposals to increase the Federal Excise Duty (FED) on cigarettes from Rs 6,500 per 1,000 cigarettes. This implies that if the government increases the Fed rate to Rs 0.50 per stick, the price of a packet will increase to Rs 10.
Another proposal is to increase the FED rate on sugary drinks from the current rate of 13% to 17% through the mini-budget.
However, the FBR is facing intense pressure from the diplomatic institutions in this regard. Another aspect is that sugar is being used in these drinks so confectionary owners who enjoy political connections regardless of political divide will also make a last ditch effort to stop this proposal at any stage.
Measures such as a flood levy of 1% to 3%, bringing in huge profits for banks through the levy and increasing withholding rates are also on the cards.
Now Prime Minister Shehbaz Sharif and Dar will have to make a tough choice at the cost of political capital at a time when the mainstream political party Pakistan Tehreek-e-Insaf (PTI) will participate in the All-Parties Conference called by the Prime Minister. has refused. next tuesday.
Declaration of assets
Meanwhile, the FBR has notified the Sharing of Assets of Government Servants Rule 2023 under which information about assets of government employees in grades BS-17 to BS-22 should be shared between the FBR and banks. will
As per Statutory Regulatory Order (S.R.O) 80(I)/2023 issued by FBR, the Board will share with State Bank of Pakistan a simplified or abbreviated version of declaration based on agreed fields, which is an official Done by the employee. According to local media reports, his electronic declaration was filed with the FBR.
The Bank will use a pre-notified, secure and only authorized email address and the email account will be under the control and responsibility of the Bank’s Head of Compliance in terms of its authorisation, use and security of data shared.
The authorized e-mail account shall be used for requesting or receiving simplified declarations as contemplated under sub-rule (3) of the rule. The Bank shall communicate to FBR the credentials of maximum four Focal Persons (Officers) who are authorized to communicate with FBR through authorized e-mail.
The following information will be provided by the Bank in respect of Focal Persons.
The Bank shall immediately inform the above of any change in the credentials of the focal persons and shall not allow the use of the secure email until the credentials are communicated to the FBR.
FBR shall provide simplified or concise information within five working days through authorized e-mail, or may refuse if information is not available or not provided for any reason.
In case of dispute, decision of FBR as custodian of information shall prevail.
The Bank shall report bi-annually on the results of the CDD regarding the use of the information received by the Bank as well as the success of new accounts opened and how the information has helped the Bank to build its client relationship. Will provide feedback. Case-wise feedback will be provided by the bank by 31st July and 31st January every year on last six months information requests.
