Responding to the International Monetary Fund (IMF)’s concerns over Pakistan’s inability to broaden its tax base in the 2023-24 budget, Finance Minister Ishaq Dar stated that Pakistan, as a sovereign nation, cannot accept all of the IMF’s demands. The minister responded to the IMF’s objections to the tax exemptions in the budget during a meeting with the Senate Standing Committee on Finance and Revenue.
Tax Exemptions and Economic Growth
Dar pointed out that Pakistan should have the right to provide some tax concessions. He reassured the senators that the government is well aware of its tax collection targets and possible revenue sources, so the tax target has been raised from Rs7.2 trillion to Rs9.2 trillion in the forthcoming budget.
Investing in the IT Sector
The minister also noted that the new budget will focus on four drivers for economic growth. He highlighted the package offered to the IT sector and the government’s aim to facilitate employment opportunities for the youth through this sector’s development. The federal government has set a target to reach $15 billion in IT exports in the next five years.
Concerns over Geopolitics and Amendments to SBP Act
Regarding external pressures, the minister mentioned that foreign elements desire Pakistan to default like Sri Lanka, leading to further negotiations with the IMF. He criticized the previous government’s amendments to the State Bank of Pakistan Act, claiming these led to the creation of “a state within a state.”
Assurances on External Payments
Dar reiterated that Pakistan would not defer any foreign payment, negating the need to reschedule loans through the Paris Club. He added that the IMF’s managing director assured Pakistan would not default and expects positive news by June 30.
IMF’s Public Criticism of Pakistan’s Budget
Finally, the minister addressed the IMF’s public dissatisfaction with Pakistan’s 2023-24 budget. The IMF argued that the government missed an opportunity to broaden the tax base, reduce tax expenditures, and went against the fund’s program conditionality with the terms of tax amnesty. Despite these criticisms, the IMF team is ready to refine the budget before its parliamentary passage.
Read: IMF Expresses Dissatisfaction with Pakistan’s 2023-24 Budget
