ISLAMABAD: The Pakistani government on Friday clarified it was firmly committed to completing the International Monetary Fund (IMF) program and was not going to be rigid about elements of the newly announced budget after the global lender raised concerns over the fiscal plan and said it was ready to work with Pakistan to “refine it.”
Since November, the IMF and cash-strapped Pakistan have been negotiating to complete the ninth review of a $6.5 billion bailout program. However, progress has not been made to ensure the revival of the facility, which is set to expire at the end of this month.
Pakistan announced its budget on June 9, but the IMF expressed dissatisfaction with certain aspects, including the failure to broaden the tax net and the proposal to introduce a tax amnesty scheme.
In a statement on Friday, the finance ministry stated, “The [Government of Pakistan] is fully committed to the IMF program, is keen to at least complete the 9th review, and the coalition government has already taken many difficult and politically costly decisions in this context.”
“We are not ‘doctrinaire’ about any element of the budget FY24 and are keenly engaged with the IMF to reach an amicable solution.”
Addressing the specific concerns raised by the IMF in relation to the budget, the ministry said the country’s tax collection body had added 1,161,000 new taxpayers in the last 11 months.
“This is an ongoing exercise and will continue, while the 0.6 percent advance adjustable withholding tax on cash withdrawals over Rs50,000 is another big step in this direction,” it said.
The ministry added the tax exemptions that had been announced in the budget were “triggers” of growth in the real sectors of the economy.
“This is the sustainable path to provide employment and livelihood to the common citizen. In any case, the amount is fairly small.”
It clarified that allocations related to the pro-poor initiatives in the budget, known as the Benazir Income Support Program (BISP), were not limited to BISP beneficiaries whose budget, in any case, had been increased from Rs400 to Rs450 billion.
“There are millions of vulnerable people above the poverty line and the budget provides Rs35 billion for targeted subsidies on five main items of food consumption through the utility stores corporation … This facility is also available for BISP beneficiaries,” it said.
The ministry added as far as the tax amnesty scheme was concerned, the only change was to “dollarize” the value of an existing provision of the Income Tax (IT) Ordinance.
“This facility, which has always been there, is available under section 111(4) of the I.T. Ordinance. The cap of Rs. 10 million (approx. $100,000 equivalent) was introduced in FY 2016. The cap set in FY 2016 is being resolved in terms of the rupee equivalence of $100,000.”
A day ago, local media widely reported Pakistan’s finance minister Ishaq Dar as saying that Pakistan was a sovereign country, so it would not accept every condition laid out by the IMF.
“Foreign hostile elements want to turn Pakistan into another Sri Lanka before the IMF negotiates with Islamabad,” he was quoted as saying.
“Pakistan does not need to go to Paris Club to reschedule loans,” Dar continued. “We will manage external payments.”
