Geo News reported that the International Monetary Fund (IMF) and the government of Pakistan are at loggerheads over a fiscal gap of Rs 900 billion, which is a major hurdle in concluding a staff-level agreement.
The IMF has bridged a huge gap of about Rs 900 billion, equivalent to 1 per cent of gross domestic product (GDP).
Geo News reported that the IMF is asking for raising the GST rate from 17 to 18 percent or levying 17 percent GST on petroleum, oil and lubricants (POL) products.
Meanwhile, Pakistan is grappling with a fiscal gap in meeting the primary deficit. Pakistani officials have asked the IMF to include cut flows under the Revised Circular Debt Management Plan (CDMP) and reduced the amount of additional subsidy required to Rs 605 billion against an earlier target of Rs 687 billion.
Therefore, the fiscal gap was in the range of Rs 400 billion to Rs 450 billion.
Moreover, top officials have completely ruled out any possibility of the IMF’s position on Pakistan Tehreek-e-Insaf (PTI) chairman Imran Khan signing on to revive the fund program and have said That no such discussion has taken place with the IMF review mission, Geo pointed out. news.
“Differences still remain on finding out the exact financial gap between Pakistan and the upcoming IMF review mission during the technical level talks. Once this is finalized with the IMF, additional taxation measures could be strengthened.” will be revealed through the upcoming mini-budget. In view of the lack of cohesion on the fiscal gap figure, the technical-level talks will continue on Monday and then the policy-level talks are expected to begin on Tuesday,” Sources confirmed speaking to a select group of reporters in the background of the discussion on Saturday.
He said the government has agreed in principle with the IMF to eliminate power and gas tariff subsidies for the export-oriented sector as such donations are completely unacceptable to the lender.
According to the report of Geo News, the official said that the scheme of exporters will be revised by bringing major changes.
Pakistan officials admitted that the power sector has so far proved to be a major hurdle in the way of achieving smooth sailing.
However, circular lending for the gas sector also remained a problematic area, Geo News reported.
The increase in expenditure will exceed the overall budget deficit target of 4.9 per cent of GDP, which is likely to reach 6.5 to 7 per cent for the current fiscal.
Meanwhile, the government is set to levy a flood tax on imports from rich sectors as well, hike the rate of federal excise duty (FED) on cigarettes by 41 per cent on windfall profits earned by the banking sector Is. Freezing tax rates on sugary drinks from 13 to 17 percent, property transactions, foreign travel and others.
The IMF assessed that the FBR would face a shortfall of Rs 130 billion in achieving the target of Rs 7,470 billion, Geo News reported.
The two sides are expected to sign a staff-level agreement by the conclusion of the talks on February 9. Then the Executive Board of the IMF will consider the approval of the next tranche, possibly in March 2023.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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