IMF-pressured Pakistan will levy Rs170 billion new taxes

F.P. Report

ISLAMABAD: Federal Finance Minister Ishaq Dar has claimed that Pakistan has reached an agreement with the International Monetary Fund and the government has received the Memorandum of Economic and Financial Policies (MEFP) from the global lender.

Addressing a news conference in Islamabad on Friday hours after the IMF issued a statement on its website on talks with Pakistan, an optimistic Ishaq Dar maintained that talks with the IMF concluded on a positive note.

The finance minister reiterated that Pakistan would complete the IMF programme and implement policies which it had committed with the global lender. He heralded that the government would have to bring a mini-budget and it would have to levy new taxes.

“Government will impose new taxes worth Rs170 billion,” the finance minister said adding that petroleum development levy target was almost achieved. We will have to increase the PDL from Rs40 to Rs50 to fully achieve the target, he added.

He said that government needed to stop the flow of rising circular debt in gas sector.

The finance minister said that the 10-day-long discussions with the IMF mission were extensive covering the power, and gas sector and on the fiscal and monetary side.

The SBP governor and different sectors were involved in the talks, he added.

Dar said that government was expecting the release of $1.2 billion tranche from the Fund. He said that yesterday, the IMF gave the final points which were reviewed in the virtual meeting.

He said that another virtual meeting would be held on Monday (February 13). He said that Prime Minister Shehbaz Sharif also assured the Fund of the implementation of the IMF programme. He said that the final round of the ninth review talks with the IMF was concluded yesterday and all matters were resolved with the global lender.

Dar said that the IMF had asked us to slap 17% sales tax on petrol which we did not agree. He, however, said that the global lender was assured that there would be no rise in the gas circular debt.

He expressed his optimism that after the successful talks with the IMF, the friendly countries would start providing economic assistance to Pakistan. 

On depleting forex reserves, the finance minister said that “we have made big payments to the lenders. We have made $2 billion repayment to a country while repaid another $1 billion to another country”. He said that the previous government reneged on the agreement it had made with the IMF.

Dar said that in the power sector, the total expenditure was in the region of Rs3,000 billion while recovery was Rs1,800 billion.

“It’s the need of the hour that we introduce reforms and reduce electricity and gas losses,” he said adding that the PDM government was fulfilling the agreement, the previous Imran government had reached with the IMF.

He said that the economy suffered massively during last five years due to inefficiency and ineptness of the previous government.