Finance Minister Optimistic On Pakistan-IMF Talks

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Finance Minister optimistic on Pakistan-IMF talks

Muhammad Aurangzeb refrains from elaborating further until a formal agreement with the Fund is finalized.

ISLAMABAD: (UrduPoint/UrduPoint / Pakistan Point News-June 13rd, 2024) Finance Minister Muhammad Aurangzeb affirmed on Thursday that negotiations with the International Monetary Fund (IMF) are progressing positively, expressing optimism about reaching a staff-level agreement by July.

Muhammad Aurangzeb disclosed ongoing virtual discussions with the IMF. He refrained from elaborating further until a formal agreement with the Fund is finalized.

He made these remarks while addressing a post-budget press conference in Islamabad on Thursday.

The journalists also staged a token-protest againt taxes on the salaried persons.

Aurangzeb clarified that any increase in the Petroleum Development Levy (PDL) would be gradual and linked to international oil price fluctuations. He emphasized that immediate hikes were not on the agenda, with adjustments slated to occur incrementally over the fiscal year, contingent upon global market conditions.

In addressing concerns about tax reforms, Aurangzeb indicated a commitment to enhancing the tax-to-GDP ratio from the current unsustainable level of 10% to 13% within the next 2-3 years. He noted the uniqueness of Pakistan’s "non-filer" concept and justified increased tax rates for this category as part of broader efforts to expand the tax base.

Aurangzeb underscored the government’s digitalization efforts aimed at curbing corruption and promoting transparency, particularly in transitioning the informal economy to a formalized structure.

Regarding the taxation of retailers and wholesalers, Aurangzeb highlighted the government’s initiative to register approximately 31,000 retailers voluntarily since April, with tax collection set to commence from July onwards.

Acknowledging Pakistan’s significant freelance community, Aurangzeb emphasized the allocation of substantial funds for the IT sector to bolster infrastructure and support technological advancements.

The budget, which includes measures expected to generate an additional Rs3.8 trillion in revenue as per IMF directives, represents a 25% increase over the previous fiscal year’s budget.

The critics argue that while the budget is expansionary and seeks to meet IMF conditions for a potential $6 to $8 billion loan under the Extended Fund Facility, it could impose additional burdens on already financially strained taxpayers.

Despite concerns over potential inflationary impacts and increased fiscal pressures, the budget does not outline austerity measures but rather focuses on boosting expenditure in key sectors.

Responding to concerns raised by the Pakistan Peoples’ Party regarding the Rs18.7 trillion budget, Aurangzeb assured that all coalition partners had been briefed comprehensively on the budget proposal and were actively involved in the process.