ISLAMABAD – Another International Monetary Fund (IMF) mission is due in the next few weeks to review revenue measures, which the government promised would be taken to improve revenue collection and bridge the fiscal deficit, an official source said. A date has not been finalised yet, but they would be in the town by mid April, he said, adding that the revenue measures agreed with the fund would be implemented by that time.
The government plans to impose of 15 percent flood income tax surcharge, 2.5 percent special excise duty, and withdrawal of tax exemption given either by the cabinet or through SROs. During recent talks, the government’s economic team mentioned the need for a timely disbursement of the pledged foreign financing, terming it critical to facilitate fiscal management, but the IMF staff said they would be giving their candid opinion if sought by the World Bank and the Asian Development Bank.
The early disbursement of donor financing remains crucial to support Pakistan’s stabilisation and reform efforts and laying the basis for a high and sustainable growth. The IMF mission had recently told Pakistan that vulnerabilities remained high due to persistent inflation, energy-sector problems, and shortfalls in revenue collection and external financing.
It said that other concerns were nonperforming loans that had increased since end-September. The fund suggested that the banks must increase capital to meet their statutory requirements, and there was a need to urgently pass amendments to the banking law to strengthen the State Bank of Pakistan’s supervisory powers.
The IMF was of the opinion that the reforms and significant fiscal consolidation would be needed during the current fiscal year to contain inflation and ensure debt sustainability. Pakistan is utilising a quarter of its budget for debt servicing, which was termed very high and needed to be brought down.
A lower budget deficit would also help manage the impact of higher oil prices on the economy.
