ISLAMABAD: The International Monetary Fund (IMF) and the government of Pakistan are at an impasse over a budget deficit of Rs 900 billion, a major stumbling block in reaching a personnel agreement, reports Geo News.
The IMF has calculated a larger gap of about 900 billion rupees, equivalent to 1% of gross domestic product (GDP).
The IMF is asking to raise the 1% GST rate from 17 to 18% or impose a 17% GST on petroleum, petroleum and lubricants (POL), Geo News reported.
Meanwhile, Pakistan disputes the fiscal gap in achieving the primary deficit. The Pakistani authorities have requested the IMF to incorporate a reduction stream under the Revised Circular Debt Management Plan (CDMP) and reduce the amount of additional grant required by Rs 605 billion from the earlier target of Rs 687 billion.
Therefore, the budget gap was between Rs 400 and Rs 450 billion.
Moreover, senior officials have completely ruled out any possibility of an IMF condition on Pakistani President Tehreek-e-Insaf (PTI) Imran Khan’s signing for the relaunch of the Fund’s program and said that no such talk had taken place with the IMF review mission, reported Geo. News.
“Disagreements remain on determining the exact fiscal gap between Pakistan and the IMF review mission during the technical talks. Once it is finalized with the IMF, the additional fiscal measures will be firmed up, which will be unveiled at the next mini-Given the lack of reconciliation on the budget gap figure, the technical-level talks will continue on Monday, then the political-level talks are expected to start from Tuesday,” officials confirmed. sources during an interview with a select group of reporters in the background discussions on Saturday.
They said the government agreed in principle with the IMF to abolish tariff subsidies on electricity and gas for the export-oriented sector, as this type of distribution was completely unacceptable to the lender.
The exporter regime will be overhauled with major changes, the official said, Geo News reported.
Pakistani authorities have acknowledged that the power sector has so far proven to be a major stumbling block on the path to smooth sailing.
However, circular debt for the gas sector also remained a problem area, Geo News reported.
The spending overrun will exceed the overall budget deficit target of 4.9% of GDP, which is expected to reach 6.5-7% for the current fiscal year.
Meanwhile, the government is ready to impose the flood tax on the affluent segments as well as imports, impose a tax at the rate of 41% on the windfall profits made by the banking sector, increase the rate of duty of excise (FED) on cigarettes, sugary drinks from 13 to 17 percent, subsidize withholding tax rates on a real estate transaction, air travel abroad and others.
The IMF estimated that the FBR would face a shortfall of Rs 130 billion to meet the target of Rs 7,470 billion, Geo News reported.
The two sides are expected to reach a personnel agreement by the time the talks conclude on February 9. Then, the IMF Executive Board will consider approval of the next tranche probably in March 2023.
The IMF has calculated a larger gap of about 900 billion rupees, equivalent to 1% of gross domestic product (GDP).
The IMF is asking to raise the 1% GST rate from 17 to 18% or impose a 17% GST on petroleum, petroleum and lubricants (POL), Geo News reported.
Meanwhile, Pakistan disputes the fiscal gap in achieving the primary deficit. The Pakistani authorities have requested the IMF to incorporate a reduction stream under the Revised Circular Debt Management Plan (CDMP) and reduce the amount of additional grant required by Rs 605 billion from the earlier target of Rs 687 billion.
Therefore, the budget gap was between Rs 400 and Rs 450 billion.
Moreover, senior officials have completely ruled out any possibility of an IMF condition on Pakistani President Tehreek-e-Insaf (PTI) Imran Khan’s signing for the relaunch of the Fund’s program and said that no such talk had taken place with the IMF review mission, reported Geo. News.
“Disagreements remain on determining the exact fiscal gap between Pakistan and the IMF review mission during the technical talks. Once it is finalized with the IMF, the additional fiscal measures will be firmed up, which will be unveiled at the next mini-Given the lack of reconciliation on the budget gap figure, the technical-level talks will continue on Monday, then the political-level talks are expected to start from Tuesday,” officials confirmed. sources during an interview with a select group of reporters in the background discussions on Saturday.
They said the government agreed in principle with the IMF to abolish tariff subsidies on electricity and gas for the export-oriented sector, as this type of distribution was completely unacceptable to the lender.
The exporter regime will be overhauled with major changes, the official said, Geo News reported.
Pakistani authorities have acknowledged that the power sector has so far proven to be a major stumbling block on the path to smooth sailing.
However, circular debt for the gas sector also remained a problem area, Geo News reported.
The spending overrun will exceed the overall budget deficit target of 4.9% of GDP, which is expected to reach 6.5-7% for the current fiscal year.
Meanwhile, the government is ready to impose the flood tax on the affluent segments as well as imports, impose a tax at the rate of 41% on the windfall profits made by the banking sector, increase the rate of duty of excise (FED) on cigarettes, sugary drinks from 13 to 17 percent, subsidize withholding tax rates on a real estate transaction, air travel abroad and others.
The IMF estimated that the FBR would face a shortfall of Rs 130 billion to meet the target of Rs 7,470 billion, Geo News reported.
The two sides are expected to reach a personnel agreement by the time the talks conclude on February 9. Then, the IMF Executive Board will consider approval of the next tranche probably in March 2023.
