By Staff Reporter
ISLAMABAD: Finance Minister Mohammad Aurangzeb said on Thursday the country expects to reach a staff-level agreement with the International Monetary Fund (IMF) next month, paving the way for a fresh loan to address its economic woes.
“The talks with the IMF are going on in a positive direction and we are hopeful that in July we would move toward a staff-level agreement,” Aurangzeb told a news conference in Islamabad.
“I don’t want to say anything in finality other than the fact that it’s (IMF talks) moving positively.”
He, however, declined to talk further on the topic of staff-level agreement with the IMF.
The government is seeking a loan of $6 billion to $8 billion from the IMF to avert a default and stabilize its economy, which is growing at the slowest pace in the region. The country received $3 billion from the IMF under a Stand-By Arrangement (SBA) last year to address immediate financial needs such as debt repayments and support economic reforms.
The budget, unveiled on Wednesday, proposes additional taxes to collect Rs3.8 trillion in revenues, in line with IMF demands. The government has set a revenue collection target of Rs13 trillion for the next fiscal year, a 40 percent increase from the current fiscal year.
The finance minister said the government’s basic principle was to expand the tax base, which is currently unsustainable. “The current tax-to-GDP ratio is simply unsustainable,” the minister said, adding that the government aims to increase it to 13 percent in the next three years.
The government estimates that new revenue measures will generate Rs 1.761 trillion, while income tax changes will unlock Rs70 billion from the salaried segment.
However, Aurangzeb said the salaried class would not be burdened. “If you look on an individual level, the burden is not that heavy.”
The government will collect Rs 350 billion from exporters and Rs 200 billion from retailers and wholesalers by increasing the advance sales tax. It also proposed a gradual increase in petroleum development levy (PDL) to Rs 80 per liter, linked with international oil prices.
Aurangzeb said the government aims to remove the concept of non-filers by making them pay a higher rate of tax on transactions. “I want to remove this concept of non-filers. I think Pakistan is the only country that has the non-filer category.”
The government is also working to digitize the country’s tax collection system to end the undocumented economy. “The process of digitization of FBR is underway and it will help in the documentation of the economy and digitizing finances,” the minister said.
Defending the allocation of Rs 1.5 trillion for the Public Sector Development Program (PSDP), Aurangzeb said the government wants to ensure that ongoing projects are completed. “Eighty-one percent of funds were allocated for schemes that were being implemented.”
Regarding privatization, Aurangzeb said the government is working with all stakeholders. “PIA and Islamabad Airport are already up for privatization and transactions are expected to be completed by August,” he said, adding that the Lahore and Karachi airports would be privatized next.
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