Pakistan and IMF are expected to reach an agreement following budget approval
The talks between Pakistan and IMF staff will now resume following the approval of the budget for the upcoming fiscal year 2022-23, during which the two parties will reach an agreement for a loan facility.
Sourcesfrom the Ministry of Finance has informed that Pakistan and IMF are expected to reach an agreement following budget approval.
It should be noted that the Fund confirmed significant progress in Pakistan-IMF talks last week.
According to Ministry of Finance sources, the talks will resume on June 28, and Finance Minister Miftah Ismail and the governor of the State Bank of Pakistan will sign the contract on Pakistan’s behalf.
According to the sources, Pakistan has asked the IMF to increase the programme to $8 billion instead of $6 billion and has requested a one-year extension to extend the programme until 2024.
According to them, the budget for the next fiscal year will be around Rs10,000 billion, and an 11 percent sales tax will be levied on petroleum products beginning July 1, 2022. Furthermore, a levy of Rs50 per litre on petroleum products has been decided.
Pakistan has agreed to levy Rs5 per litre on petroleum products, increase the tax collection target from Rs7,005 billion to Rs7,450 billion, increase the customs collection target from Rs950 billion to Rs1,005 billion, and increase the General Sales Tax (GST) collection target from Rs3,008 billion to Rs3,300 billion. Furthermore, the income tax collection target has been set at Rs55 billion.
According to sources, the policy framework will be handed over to Pakistan within the next two days.
Miftah announced on Friday that the government will no longer provide subsidies for petroleum products, and that the levy on the commodity will be increased to Rs50.
During an interview on Geo News’ “Naya Pakistan,” the minister stated that the previous government put Pakistan on the verge of default and should not have provided subsidies on petroleum and energy.
“Rs1,500 was spent on subsidies during the previous government’s tenure,” the finance minister said.