Virtual talks between IMF, Pakistan on Monday; finance czar Ishaq Dar confirms draft MEFP received from global lender
Ishaq Dar, former Finance Minister of Pakistan, recently stated that a total of Rs170 billion in taxes will have to be imposed in order to address the country’s current economic challenges. This statement was made in light of the government’s efforts to stabilize the economy and increase its revenue base.
The government has been facing a significant shortfall in tax collection in recent years, and this has led to a widening fiscal deficit. In order to address this challenge, the government has proposed a number of measures aimed at increasing tax compliance and broadening the tax base.
One of the key measures proposed by the government is the imposition of new taxes on various goods and services. This is expected to bring in additional revenue and help bridge the gap between spending and revenue. The government has also proposed measures to improve tax administration and reduce tax evasion, which is a major issue in the country.
In addition to the new taxes, the government has also been implementing various cost-cutting measures to reduce its spending. This includes reducing subsidies and streamlining government operations. The government has also been working to increase its non-tax revenue, such as by privatizing state-owned enterprises and increasing royalties from natural resources.
Despite these efforts, it remains to be seen how effective these measures will be in stabilizing the economy and reducing the fiscal deficit. The government will need to continue its efforts to increase revenue and control spending in order to address the country’s economic challenges.
It is important to note that the imposition of new taxes can have a significant impact on the economy and the lives of citizens. It is therefore crucial that the government implements these measures in a manner that is fair, transparent, and equitable.
What did the IMF say?
In his brief statement, IMF mission chief Nathan Porter said that “virtual discussions” will continue between the two sides in the coming days to finalise the “implementation details” of the policies.
Porter said timely and decisive implementation of policy measures along with resolute financial support from official partners are critical for Pakistan to successfully regain macroeconomic stability and advance its sustainable development.
The statement welcomed Prime Minister Shehbaz Sharif’s commitment to implement policies that are required to “safeguard macroeconomic stability”.
He also thanked the authorities for taking part in “constructive discussions”.
Porter noted that “considerable progress” was made during the talks with Pakistani officials on policy measures to address domestic and external imbalances.
The IMF mission chief highlighted that the “key priorities include strengthening the fiscal position with permanent revenue measures and reduction in untargeted subsidies, while scaling up social protection to help the most vulnerable and those affected by the floods; allowing the exchange rate to be market determined to gradually eliminate the foreign exchange shortage; and enhancing energy provision by preventing further accumulation of circular debt and ensuring the viability of the energy sector”.
Virtual meeting with IMF on Monday
After his confirmation that Pakistan had received the MEFP draft, minister Dar said a virtual meeting will now be held with the Washington-based lender to take things forward.
“The government and its economic team are struggling to finalise the deal with the IMF,” he said.
At the start of his media talk, the finance minister gave a reminder that the government is implementing a programme signed by former prime minister Imran Khan with the IMF in 2019-2020. He reiterated that the Shehbaz Sharif-led government is holding talks on this agreement as a “sovereign commitment”.
“This is an old agreement which had been suspended and delayed previously,” he noted.
Moving to Pakistan’s talks with the IMF mission, the finance minister said that the 10-day-long discussions were extensive and covered the power and gas sectors and the fiscal and monetary side.
“The SBP governor and officials from different departments and ministries participated in the talks,” said Dar.