The International Monetary Fund (IMF) has advised Pakistan’s government to implement significant, substantial and sustainable tax and non-tax revenue measures to raise additional funds to close the projected Rs600 billion revenue shortfall in the fiscal year framework.
The IMF is currently holding discussions for the ninth review, which will go on until February 9. Mission Chief Nathan Porter leads the IMF team.
The government finally agreed to all the terms set by the IMF after months of resistance due to the nation’s declining foreign exchange reserves and deteriorating economic situation.
A staff-level agreement was much anticipated under the $6.85 billion Extended Fund Facility (EFF).
The government was also urged by the visiting IMF delegation to increase the Federal Board of Revenue’s (FBR) tax collection target to bring it into line with the anticipated nominal growth for the current fiscal year, which an increase in CPI-based inflationary pressures will primarily drive.
Upon completion of the fiscal framework, the Fund appears prepared to provide an adjuster for flood expenses. However, it will depend on how much could be spent on floods, both on the development and non-development sides of the budget, particularly through payments made through the Benazir Income Support Programme (BISP).
First and foremost, a fiscal gap estimate will need to be agreed upon by the IMF and the Pakistani side. Once it has been decided, the next mini-budget will be able to finalize both tax and non-tax revenue measures.
