Govt to impose Rs215bn new taxes for revival of IMF deal
"Pakistan and IMF had detailed negotiations as a last effort to complete the pending review," Ishaq Dar tells parliament
June 24, 2023
- "New taxes will not burden poor and middle segments of society."
- Development comes a day after PM-IMF chief meeting in Paris.
- Overall budget deficit will come down with cushion of Rs300bn.
In a last-ditch effort to clinch a stalled rescue package with the International Monetary Fund (IMF), the government has agreed to introduce a number of changes to its budget for the fiscal year 2024, confirmed Finance Minister Ishaq Dar on the floor of the National Assembly.
"Pakistan and the IMF had detailed negotiations as a last effort to complete the pending review," he told the parliamentarians on Saturday.
For the fiscal year starting next month, the government will raise a further Rs215 billion in new tax and cut Rs85 billion in spending, as well as a number of other measures to shrink the fiscal deficit, the financial czar added.
The review came a day after Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris.
About a week remains before the IMF's Extended Fund Facility (EFF) agreed in 2019 expires on June 30.
Under the $6.5 billion facility's ninth review, negotiated earlier this year, Pakistan has been trying to secure $1.1 billion of funding stalled since November.
Giving details, Dar said: “Pakistan has agreed on Rs215 billion taxes after three-day parleys with the officials of the IMF to complete the 9th review under the EFF, pending due to the country’s external financing gap.”
“As a result of the talks with the IMF, for the fiscal year 2023-24, the final taxes of only Rs215 have been agreed, ensuring that it will not burden the poor and middle segments of the society,” he said while winding up general discussion on the budget for the year 2023-24.
Pakistan, he further said, would bring down the running expenditure by Rs85 billion, which would have no impact on the proposed development budget, the raise in salaries and pensions of the federal government employees.
He said the government held talks with the Washington-based lender with complete sincerity and assured the parliament that once the things with the international lender were settled; all details would be made public by placing the agreement on the official website of the Ministry of Finance.
Resultantly, he said the proposed tax collection target of the Federal Board of Revenue (FBR) had been increased from Rs9.2 trillion to Rs9.415tr, with the provincial share going up from Rs5.276tr to Rs5.390tr, the federal government total expenditure estimate from Rs14.460tr to Rs14.480tr and pension estimate from Rs761 billion to Rs801bn.
Similarly, he said the subsidy estimate would be at Rs1.064tr and grants at Rs1.405tr, adding as a result of all these measures, the overall budget deficit would come down with a cushion of Rs300bn [Rs215 billion taxes and Rs85 billion reduction in running expenditures].
— Additional input from APP
