ISLAMABAD: The Ministry of Finance stated that Pakistan has fulfilled all the relevant conditions placed by the IMF, including external financing issues, and is hopeful for immediate implementation of the 9th review being pending since last November.
In a responsive press statement on ongoing IMF negotiations, received here on Friday, it also maintained the IMF concern over the proposed amnesty scheme while explaining that the scheme would be placed in a specific situation and the only change was to “dollarize” the value of an existing provision of I.T. Ordinance.
The statement further said that the 9th IMF review was conducted in early February 2023 and GoP completed all technical issues at a fast pace. The only outstanding issue was of external financing which we understand was also amicably resolved in the Prime Minister’s telephonic call on 19th May 2023, with the M.D. of IMF.
Though the Budget FY 24 was never a part of the 9th review, however in line with PM’s commitment to the MD IMF, we shared the budget numbers with the IMF mission. And we are continuously engaged with them even on the Budget, it added.
Pakistan’s Stance on IMF Reservations
On the specific issues raised by Esther Perez our position is as under:-
As far as the broadening of the tax base is concerned, the FBR has added 1,161,000 new taxpayers i.e. 26.38% to its tax base in the last 11 months. This is an ongoing exercise and will continue. The 0.6% advance adjustable withholding tax on cash withdrawals over Rs. 50,000 is another big step in this direction.
The tax exemptions that have been announced in the Budget are “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.
On BISP allocation, the pro-poor initiatives in the Budget are not limited to BISP beneficiaries whose budget in any case has been increased from 400 to 450 Billion. (This was last raised by GoP in Feb 2023 from Rs. 350 to Rs. 400 Billion). There are millions of vulnerable people above the poverty line and the Budget provides Rs. 35 Billion for targeted subsidies on five main items of food consumption through the Utility Stores Corporation for families up to a PMT scorecard 40. This facility is also available for BISP beneficiaries.
As far as the “amnesty” is concerned the only change is to “dollarize” the value of an existing provision of the I.T. 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.
The government of Pakistan is fully committed to the IMF programme and is keen to at least complete the 9th Review. The Coalition Govt has already taken many difficult and politically costly decisions in this context. We are not “doctrinaire” about any element of the Budget FY 24 and are keenly engaged with the IMF to reach an amicable solution.
