Pakistan has committed to increasing Federal Board of Revenue (FBR) taxes by Rs1.272 trillion (almost 2.8 per cent of GDP) and a price increase of Rs4.97 per unit in the remaining three months of the current fiscal year (FY).
IMF released a document, and it says that the government of Pakistan has agreed to continuous adjustments in electricity tariffs from next year on a monthly, quarterly and annually basis.
The documents also state that the government would also increase the price of petroleum and oil products (maximum of Rs30).
The petroleum levy target for the coming year is Rs607bn. The provinces have given an undertaking of Rs570bn cash surplus to the federal government and increase it by Rs729bn next year.
The government has also set a target of Rs5.963tr (against Rs4.691tr revised target of current FY) in the next year budget for FBR. Additional Rs500bn tax generation through General Sales Tax (GST) and personal income tax reform for FY 2022 budget is also under consideration.
The government has also given an undertaking to make adjustments in gas tariff and will not consider any tax exemptions or amnesties in the future.
Also, IMF made detailed audits are a must for the fund allocation to combat COVID-19, which includes contracts and beneficial ownerships of bidding results and medical supplies.
IMF’s mission chief for Pakistan Ernesto Ramirez Rigo said that despite the hard economic conditions amid COVID-19, critical adjustments in energy tariff are inevitable. The rising circular debt is detrimental to public finance and economic growth.
He said that these unpleasant changes are necessary and the solution lies in cost recoveries, loss reduction and system improvement.