From Asif Shehzad
ISLAMABAD (Reuters) – As Pakistan discussed its $7 billion bailout reform agenda with the International Monetary Fund during an unscheduled staff visit last week, Finance Minister Muhammad Aurangzeb said on Sunday that no new taxes It is recommended to install.
The talks in Islamabad came within six weeks of the IMF’s approval of the bailout, an unusual move because it is rare for the fund to discuss reforms before revising the reform plan under the loan program.
The first review of Pakistan’s reforms is due in the first quarter of 2025.
“We discussed taxation, energy sector, privatization of loss-making state-owned enterprises (SOEs) and public finance reforms,” Aurangzeb said in a recorded video statement aired on state television.
After wrapping up the visit, the IMF said it was encouraged by Islamabad’s reaffirmation of its commitment to economic reforms under the Expanded Fund Facility, approved by its board in September to mitigate risks. .
The mission did not specify weaknesses, but sources in Pakistan’s finance ministry said the IMF visit revealed some major shortcomings.
Among them was a shortfall of about 190 billion rupees ($685 million) in revenue collection during the first quarter of the current fiscal year, the sources said.
The period also saw an external financing gap of $2.5 billion, while Pakistan failed to sell its national airline.
He feared that Pakistan might need to impose new taxes to cover the shortfall.
But Aurangzeb said the shortfall would only be met through enforcement to force people to pay their taxes, meaning there would be no new revenue measures.
“We are going to be very strong on compliance and enforcement,” he said, adding that all sectors have to play their part in the country’s economy.
Both sides agreed on the need to continue prudent fiscal and monetary policies and to mobilize revenues from underutilized tax bases, the IMF said.
Pakistan’s $350 billion economy has struggled with boom cycles for decades, requiring 23 IMF bailouts since 1958.
