By Staff Reporter
ISLAMABAD: Pakistan’s talks with the International Monetary Fund (IMF) on $6 billion bailout deal is trudging closer to the finish line, and the south Asian country could receive the stuck-up disbursement within the current month, sources said on Wednesday.
The two sides have been in winding talks for two months to revamp a stalled facility agreed in 2019 under former prime minister Imran Khan, who however was unable to keep Pakistan from sliding into debt, currency, and external account crises.
The next tranche that Pakistan is to receive upon a successful review is $900 million, and a green light from the IMF would also open up other global funding avenues. Pakistan is already halfway through the 39-month IMF programme .
“Pakistan has made progress in talks and both sides are inching towards a staff level agreement,” a source said.
The main impediment has almost removed as Islamabad has indicated to increase petroleum product prices “by removing subsidies of Rs59 on diesel and Rs25 per litre on petrol”.
“The IMF has also told Islamabad to make adjustment in personal income tax slabs and tax rates on more than Rs200,000 per month earnings should be increased.”
The sources said rate of tax for annual salary income of Rs1.2 million to Rs2.4 million is likely to be increased to 10 percent from 7 percent. “The tax rate for annual earner from Rs2.4 million to Rs3.6 million will be raised to 20 percent and accordingly the rate will be revised upward for higher income slabs.”
Reuters on Monday reported that the IMF has asked Pakistan for additional measures to bring the budget in line with the key objectives of its programme.
“Our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key program objectives,” Esther Perez Ruiz was quoted by Reuters as saying.
“Discussions with the authorities continue to obtain more clarity on certain revenue and spending items and allow for a full assessment,”
Finance minister Miftah Ismail was quoted as saying last week that the IMF has expressed concern about the country’s recently unveiled budget, and the government can make changes to satisfy the lender.
Pakistan unveiled massive spending cuts and tax increases in the fiscal year of 2022-23 to secure the crucial IMF bailout programme for economic stability.
Miftah said the IMF was concerned about fuel subsidies, a widening current account deficit, and the need to raise more direct taxes. Fuel subsides have been cut in the last two weeks, and the remaining support is expected to be removed in coming days.
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