Policy-level discussions between Pakistan and the International Monetary Fund (IMF) have been well underway since Monday and both sides have so far agreed to maintain the annual tax collection target of Rs. 9,415 billion, besides other revenue-enhancing measures.
The lender has also contacted key bilateral partners affirming support for Pakistan in terms of additional rollovers and external inflows in the coming months.
Sources in FBR told ProPakistani that there will be no mini-budget in the ongoing fiscal year, and the Caretaker Finance Minister Dr. Shamshad Akhtar has assured the IMF that no new taxes will be introduced. Instead, the focus will be on achieving the ambitious annual tax target, with officials expressing confidence that the target will be met easily.’
FBR officials revealed that all targets for the first four months of FY24 have been successfully met, and a comprehensive plan detailing administrative measures to achieve the mammoth Rs. 9,415 billion tax target has been provided to the IMF.
The IMF has expressed confidence in Pakistan’s ability to achieve the specified tax goal and that measures will be taken to address tax evasion in the real estate sector. Sources revealed that the eradication of tax evasion in real estate is deemed crucial for the overall health of the economy, and the FBR is resolute in implementing necessary reforms.
Moreover, the tax regulator pledged to enhance administrative measures to bolster tax revenue. The overarching plan is to expand the tax net by documenting economic activities, a move that aligns with the ongoing efforts to foster transparency.
In an informal conversation with the media, Caretaker Finance Minister Dr. Shamshad Akhtar emphasized the government’s commitment to maintaining the Rs. 9,415 billion tax target without imposing an additional tax burden on the public. Meanwhile, she announced a policy of austerity in government expenditures, assuring the IMF that budget deficits would be controlled through prudent fiscal management.
The finance minister said that the crises lender has expressed full confidence in the caretaker government. She added that the IMF particularly highlighted its satisfaction with the Benazir Income Support Program and development spending initiatives.
There is a feeling that the $710 million second tranche of the $3 billion Standby Arrangement (SBA) will likely be disbursed in the first part of December with the approval of the IMF’s Executive Board.
Positive Vibes From UAE
Sources revealed that IMF Mission Chief Nathan Porter held a separate meeting with the United Arab Emirates (UAE) Ambassador Hamad Obaid Al Raabi on Monday. The focus of the discussion centered on devising strategies to bridge the external financing gap faced by Pakistan. The talks underscored the critical need for resources to stabilize the country’s economic situation.
Beyond the financial matters, discussions encompassed topics of mutual interest between the parties involved. Sources said both sides delved into broader diplomatic and economic concerns, seeking common ground to address shared challenges.
The UAE ambassador expressed commitment to playing a role in ensuring Pakistan’s economic stability. Assurances were given regarding active participation in efforts to alleviate the external financing challenges faced by Pakistan, signifying a collaborative approach between the two nations.
Pakistan remains engaged in talks with the IMF to address its pressing issue of a $6.5 billion external financing gap. The ongoing high-stakes meetings involve key stakeholders, including foreign ambassadors participating in the IMF mission visiting Pakistan.