Govt Moves to Meet IMF Conditions as Revenue Gap Widens
The government has assured the International Monetary Fund that it will amend state owned enterprise (SOE) laws by August next year and remains prepared to impose federal excise duty on fertiliser and pesticides to counter a widening revenue shortfall. These commitments come as Pakistan seeks to complete the next review of its $7 billion IMF programme.
Officials confirmed that the Federal Board of Revenue (FBR) missed its five-month tax collection target by a significant margin of Rs413 billion. In response, authorities have pledged to introduce a mini-budget in January to bridge the gap. Although contingency measures were pre agreed with the IMF, FBR Chairman Rashid Langrial recently stated that he does not expect these steps to be activated.
Sources also revealed that the government violated another programme requirement by granting a new tax exemption on imported sugar after exporting the commodity earlier which contributed to a local supply shortage.
The State Bank of Pakistan informed the IMF board that it had used its authority under the Banking Companies Ordinance to restructure and wind up an undercapitalised bank, fulfilling one of the IMF’s prior conditions. The central bank further reaffirmed its commitment to maintaining a flexible exchange rate and continuing a monetary policy stance aimed at controlling inflation.
Despite this, Special Investment Facilitation Council (SIFC) National Coordinator Lt Gen Sarfraz Ahmad recently urged the central bank to cut interest rates, pointing to reduced inflation levels hovering around 6%.
The federal government also reiterated its pledge to keep adjusting electricity and gas tariffs in line with costs and to gradually limit the state’s role in commercial sectors, in line with IMF expectations.
