By Staff Reporter
ISLAMABAD: Pakistan will have to ‘do more’ to align the Budget 2022-23 with IMF’s requisites for the resumption of Extended Fund Facility (EFF) programme, a top fund official said on Monday.
“Discussions with the authorities continue to obtain more clarity on certain revenue and spending items and allow for a full assessment; however, our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key program objectives,” local media quoted Esther Perez Ruiz, IMF’s Resident Chief in Pakistan as saying.
“The fund staff stands ready to continue to support the authorities’ efforts in this respect and, more generally, in the implementation of policies to promote macroeconomic stability.”
Ruiz, however, did not explain what were those “additional measures” that were indispensable for the revival of the stalled $6 billion EFF.
However, top official sources explained that by additional measures the IMF meant further hike in petrol and diesel prices within this week.
The government hiked petroleum prices by Rs60litre for domestic consumers before the budget, and given the IMF dissatisfaction with it another hike is on cards within this ongoing week.
Subsidies on the prices of petrol and diesel still continue and another partial withdrawal is likely before a staff level agreement with the IMF.
The IMF is also pushing the government to enforce power tariff hike as determined by NEPRA that had approved a raise in baseline tariff by Rs 7.91/unit as well as fuel adjustments on quarterly basis.
The IMF also wants revision in the proposed Personal Income Tax (PIT) in order to make it progressive as the FBR proposed reducing the number of slabs from 12 to 7 but the tax rates were reduced for salary earners up to Rs1 million/month.
The IMF has made it clear that the tax relief provision of Rs47 billion is totally unacceptable so the government will have to make changes in it.
It is not yet known how the IMF reacted to the petroleum levy projection of Rs750 billion because the government jacked up its limit from Rs30 to Rs50/litre. It is also unclear how it will be implemented given the persistent higher prices in the international market.
Minister for Finance Miftah Ismail last week said the government would move ahead with imposition of petroleum levy in the range of Rs5/litre and in a gradual manner, adding that the government could not slap Rs50/litre levy in one go at all.
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