An agreement between Pakistan and the International Monetary Fund (IMF) over the first review of the $3 billion loan program almost certain. Kristalina Georgieva, the IMF’s managing director, stated on Wednesday.
The head of the IMF commended the Pakistani government for adhering to the program in spite of political and economic obstacles. In order to maintain the nation’s progress, she also pushed them to increase tax collection.
“I anticipate a review agreement to be reached this week,” Georgieva stated in a Bloomberg TV interview.
Under the leadership of Nathan Porter, the IMF team is presently in Pakistan reviewing the Stand-By-Arrangement (SBA), which was agreed in July to assist the nation in avoiding a sovereign debt default.
Pakistan is anticipated to get an additional $450 million following the conclusion of the review, on top of the $1.2 billion it got as the loan’s first tranche.
According to Georgieva, Pakistan’s tax-to-GDP ratio, which is now at 12%, must rise to at least 15% in order to provide the government with sufficient funding.
More levies on the real estate, retail, and agricultural industries
Profit earlier revealed that the Federal Board of Revenue (FBR) has been ordered by the IMF to levy more taxes on the retail, real estate, and agriculture industries.
In particular, the IMF has recommended more stringent real estate tax enforcement. Should there be a deficiency in tax income, shops could face a fixed tax for the current fiscal year.
According to further sources, the lender has suggested that the tax agency use its authority to impose taxes on merchants beyond December.
The IMF was informed that before imposing taxes on the agriculture sector, consultation with the provinces is required.
By the end of the present fiscal year, FBR sent a report on possible revenue to the IMF. The Tax Policy and Management Task Force, which falls under the jurisdiction of the tax regulator, was also briefed by the IMF.
According to reports, the IMF requested a report on the execution of Track and Trace. It is important to remember that negotiations with the IMF began on November 2, 2023, and both parties shared vital information to expedite the current evaluation.
Pakistan’s performance throughout the evaluation process will determine whether or not the lender awards a second tranche of $700 million.
The review’s successful conclusion will surely have a significant impact on the nation’s economic stability and its capacity to maintain financial support from the lender of last resort.
