Implementing IMF programme
Responding to a question in a media briefing in Washington about cutting subsides and increase in tax collection, International Monetary Fund (IMF) spokesperson Gerry Rice reminded the government of Pakistan about the two major components of fund’s loan programme worth $6 billion, which include mobalisation of sufficient domestic tax revenue and putting public debt on firm downward trend. He said that IMF Managing Director had stressed on these issues in his earlier meeting with the Prime Minister Imran Khan.
Tax collection targets have been missed by the Federal Board of Revenue (FBR) by Rs.14 billion in the month of July and Rs.50 billion in August. If this trend continues then tax revenue of Rs.51 trillion could not be generated at the end of current fiscal year. The talks between the FBR and traders for either sales tax registration or fixed income tax levy have failed. The sales tax is being collected by the traders from buyers of goods and services but it is not deposited in the treasury of the government. The matter of bring traders into tax net needs skillful dealing on the part of tax authorities.
The government has not succeeded in putting the public debt on downward trajectory. It inherited the debt burden of Rs. 24 trillion from the previous government but despite claims of measures in debt reduction additional burden of Rs.7.6 trillion has been added. The public debt-GDP ratio has gone up to 71 percent, which is 11 percent above the sustainable limit. Although the imports have shown steep decline of 30 percent plus and exports have grown by 8 percent yet the public debt will go up to meet the obligations of previous loans payment and balance of payments. It remains to be seen how the key elements of IMF program are taken care off.