ISLAMABAD: Pakistani officials informed the International Monetary Fund (IMF) that the federal cabinet will approve various tax proposals to raise additional revenue of Rs 170 billion through a presidential ordinance on Tuesday.
“We will take the route of implementing the ordinance to avoid further wastage of time. Once the Cabinet approves it, the Presidential Ordinance will be issued within the current week,” sources told JEE News on Monday.
The Washington-based lender suggested abandoning the one-off route in favor of permanent tax measures.
However, due to stiff resistance from the IMF, the government decided to scrap the flood levy on imports and raise the general sales tax (GST) rate by 1 percent from the standard rate of 17. 18 percent suggested.
The IMF had given a prescription for slapping the standard rate of GST on petroleum products, but Islamabad strongly opposed it. However, the petroleum levy on High Speed Diesel (HSD) will be increased from Rs 40 to Rs 50 per litre. The possibility of further increase in petroleum levy limit cannot be ruled out at present but Pakistan is still resisting it.
Officials shared their detailed comments on the Memorandum of Monetary and Economic Policies (MEFP) with the IMF’s review mission on Monday through a virtual meeting and asked the fund to make adjustments on all of them, a senior finance ministry official said. Take a surprising approach to doing it. Front in stages.
However, the IMF has made it clear that Pakistan will have to take permanent tax measures to raise Rs 170 billion in additional taxes for the remainder of the current fiscal year.
However, the government is still making last-ditch efforts to convince the IMF to allow certain tax measures that could be considered “one-off” such as the imposition of some form of flood levies. But the IMF wants permanent taxation measures, so the government will have to impose massive taxation with an annual impact of Rs 500 billion.
Sources said that ‘by imposing taxes of 450 to 500 billion rupees on an annual basis, the government can collect an additional revenue of 170 billion rupees in the remaining period of the current financial year till 30 June 2023’.
The two sides are expected to reach an agreement at the personnel level by the end of this week. Asked about the possibility of enacting an ordinance to unveil the mini-budget, an official said a decision would be taken within a week whether to introduce a bill or issue an ordinance for the same.
However, another official said the government does not have the luxury of waiting for the next 15 days as every day is counting to collect the required tax revenue of Rs 170 billion through permanent measures. A possible strategy could be to unveil the mini-budget through a Presidential Ordinance and then present it to Parliament within a stipulated period under constitutional obligations.
The IMF has been informed that the government is pursuing bilateral and multilateral lenders to secure the required dollar inflows and once it receives the IMF’s seal of approval and support once the fund program is restored. will go, Islamabad will be able to increase it. $12 to $13 billion inflows are expected. If all dollar inflows are realized, the current fiscal year will end immediately without the risk of default escalation.
