For Loan Revival, Pakistan Has To Do More: IMF

Pakistan’s Rs 9.5 trillion budget for the next financial year notwithstanding, the International Monetary Fund (IMF) says more measures would be needed to bring the country’s budget in line with key objectives of the $6 billion programme. A senior government functionary said that the IMF’s main concerns were about the personal income tax rates, fuel and electricity subsidies and the reliability of the budget numbers. The IMF has asked Pakistan to show a primary budget surplus, which the government has reflected at Rs 152 billion but the global lender doubts the credibility of these numbers. In the budget 2022-23, the government reduced the tax burden on the salaried class and provided a relief of Rs47 billion through increasing the annual income tax exemption limit to Rs1.2 million and reducing the individual tax rates. However, the IMF demanded the increase in the tax burden to generate additional over Rs120 billion from the salaried persons. The government has hiked the prices of petroleum products, the third such raise in less than a month. Petrol now sells at about Rs 234 a litre. Finance Minister Miftah Ismail said the government had “no choice but to pass on” the impact of international prices to consumers in Pakistan. Pakistan is halfway through a $6 billion, 39-month IMF programme that has stalled over the lender’s concerns over the status of some of its objectives, including fiscal consolidation. The next tranche Pakistan is to receive upon a successful review is $900 million. A green light from the IMF would also open up other global funding avenues. Pakistan urgently needs funds as its foreign exchange reserves have dwindled to $9.2 billion, enough for less than 45 days of imports.