Govt agrees to raise further Rs215b in taxes to clinch IMF deal

Minister for Finance and Revenue Senator Mohammad Ishaq Dar on Saturday informed the National Assembly that Pakistan had agreed to raise a further Rs215 billion in new taxes after three-day parleys with the officials of the International Monetary Fund (IMF) to complete the 9th review under the Extended Fund Facility (EFF), pending due to the country’s external financing gap. "Pakistan and IMF had detailed negotiations for the last three days as a last effort to complete the pending review," he told parliament. For the fiscal year starting next month, Pakistan will raise a further 215 billion rupees ($752 million) in new tax and cut 85 billion rupees in spending, as well as a number of other measures to shrink the fiscal deficit, he said. That will revise Pakistan's revenue collection target to 9.415 trillion rupees ($33 billion) and put total spending at 14.480 trillion rupees ($51 billion), Dar said. "These changes will make our fiscal deficit much better," he said. Read more: Govt softens stance to meet IMF terms He made it clear that this reduction will not affect the annual development plan as well as salaries and pensions of government employees, claiming that IMF has agreed to our stand. وزیر خزانہ کا قومی اسمبلی اجلاس میں اظہارِ خیال، پوری قوم کو بتانا چاہتا ہوں مشکل مالی حالات کی کئی وجوہات ہیں، پچھلی حکومت کی ملک دشمن پالیسیوں کی وجہ سے ملک کی معشیت پر برے اثرات مرتب ہوئے ہیں، نو مئی جیسے واقع سر فہرست ہیں، ان ریاست مخالف سرگرمیوں نے جلتی پر تیل کا کام… pic.twitter.com/mlxjHuubgt — National Assembly 🇵🇰 (@NAofPakistan) June 24, 2023 "We have ensured that the new tax will not affect the poor," he claimed, and said the petrol levy will be raised from 50 rupees to 60 rupees, and will be capped at the new ceiling for any future changes. He also announced lifting of restriction of all imports enforced in December in a bid to cut the current account deficit, which has been one of the major concerns by the IMF to release the funds. Money allocated for cash handouts to the poor was also revised from 450 billion rupees to 466 billion rupees for fiscal 2024, Dar said. The review came a day after Prime Minister Shehbaz Sharif met with IMF Managing Director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris. There is less than a week to go before the IMF's Extended Fund Facility 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. With central bank foreign exchange reserves barely enough to cover one month of controlled imports, Pakistan is facing an acute balance of payment crisis, which analysts say could spiral into a debt default if the IMF money doesn't come through. The IMF funding is critical to unlock other bilateral and multilateral financing for the debt-ridden South Asian economy. Dar said that Pakistan held talks with the IMF with complete sincerity and assured the house 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. "I hope, God willing, that we will have an agreement with the IMF," he concluded. (With additional input from Reuters, APP and Radio Pakistan)

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