ISLAMABAD: Pakistan and the IMF scheduled to conclude an agreement at staff level on Friday, and on Wednesday both sides agreed that within two years, the country would withdraw Rs700 billion tax exemptions.
During their discussions, both sides tried to solve the problem of a financing gap of around $11 billion for the next fiscal year, 2019-20.
They were agreed that Pakistan would increase electricity and gas tariffs for the consumers in the next budget.
It is agreed that the regulator of the power sector, the National Electricity Regulatory
Authority (Nepra), would be independent and that government interference would be minimized to take popular decisions.
Electricity and gas tariffs will be increased, the government assured the IMF
An official of the Ministry of Finance confirmed that the financial gap was projected to be between $ 10 and $ 11 billion for the next fiscal year and also demand of the IMF for an increase in the policy rate by 100-200 basis points was also agreed upon.
Different measures have also been agreed to establish foreign exchange reserves.
The IMF stressed earlier that CAD would be between $ 4 and $ 6 billion, the official said. However, the deficit under the IMF program would amount to $ 8 billion for the following fiscal year.
The government's major challenge is how to reduce the budget deficit that it can only reduce costs and increase revenues, but it has limited space to reduce expenditures.
"The IMF is against reducing the development budget, so there is no point in it being cut. The only way was to increase revenues," added the official.
The last fiscal year budget deficit (2017-18) amounted to 6.6 percent of GDP and experts forecast that the current fiscal (2018-19) deficit will be over 7 percent. The former Finance Minister Dr. Hafeez Pasha recently told that the budget deficit will be about 7.6% of the GDP by June 30.
On Thursday (today), the IMF team will meet with PM Finance Adviser Dr. Hafeez Shaikh. If there is notice of the appointment of Shabbar Zaidi as FBR chairman, he will also attend the meeting.
https://www.rightdeed.com/blog/735/pakistan-will-move-to-withdraw-rs700-billion-tax-exemptions
During their discussions, both sides tried to solve the problem of a financing gap of around $11 billion for the next fiscal year, 2019-20.
They were agreed that Pakistan would increase electricity and gas tariffs for the consumers in the next budget.
It is agreed that the regulator of the power sector, the National Electricity Regulatory
Authority (Nepra), would be independent and that government interference would be minimized to take popular decisions.
Electricity and gas tariffs will be increased, the government assured the IMF
An official of the Ministry of Finance confirmed that the financial gap was projected to be between $ 10 and $ 11 billion for the next fiscal year and also demand of the IMF for an increase in the policy rate by 100-200 basis points was also agreed upon.
Different measures have also been agreed to establish foreign exchange reserves.
The IMF stressed earlier that CAD would be between $ 4 and $ 6 billion, the official said. However, the deficit under the IMF program would amount to $ 8 billion for the following fiscal year.
The government's major challenge is how to reduce the budget deficit that it can only reduce costs and increase revenues, but it has limited space to reduce expenditures.
"The IMF is against reducing the development budget, so there is no point in it being cut. The only way was to increase revenues," added the official.
The last fiscal year budget deficit (2017-18) amounted to 6.6 percent of GDP and experts forecast that the current fiscal (2018-19) deficit will be over 7 percent. The former Finance Minister Dr. Hafeez Pasha recently told that the budget deficit will be about 7.6% of the GDP by June 30.
On Thursday (today), the IMF team will meet with PM Finance Adviser Dr. Hafeez Shaikh. If there is notice of the appointment of Shabbar Zaidi as FBR chairman, he will also attend the meeting.
https://www.rightdeed.com/blog/735/pakistan-will-move-to-withdraw-rs700-billion-tax-exemptions
