The International Monetary Fund (IMF) has projected that Pakistan’s exports will increase to $36.7 billion in five years, in FY 2023-24.
The pressure of current account deficit on the country will also ease out gradually from its peak $19.9 billion in 2017-18 to as low as $6.95 billion in the current fiscal year down to $5.49 billion in 2020-21, the IMF said in its recently published staff report on Pakistan.
The trade deficit would also decline to $24.9 billion in the current fiscal year from $29.46 billion in 2018-19, however, it will further go up to $26.8 billion mainly on the back of growing import needs in coming years.
Meanwhile, the report also estimated that due to policy measures committed by the Pakistani authorities, the Federal Board of Revenue (FBR) is likely to collect around Rs. 5.5 trillion during the current fiscal year which would increase to Rs. 7.001 trillion in next year while in 2021-2022 the revenues would reach Rs. 8.3 trillion and Rs. 9.48 billion in the subsequent year.
The overall tax revenue of the country will surge to Rs. 7.165 trillion in 2019-20 followed by Rs. 8.9 trillion in 2020-21, Rs. 10.6 trillion in 2021-22, Rs. 12.12 trillion in 2022-23, and Rs. 13.37 billion in 2023-24.
With less than 1.5 million taxpayers filing tax returns and tax compliance generally very low, tax policy and tax administration measures will center on broadening the tax base while maintaining a low tax rate, aiming to ensure the progress of the tax system, it added.
Staff and the authorities concurred that an additional 4-5 percentage points of GDP in additional tax revenues could be achieved by the end of the program, bringing Pakistan’s tax ratio in line with other emerging markets.
In the near term, measures include removing exemptions and preferential treatment to reduce distortions in the tax system and broaden the tax base. These include the removal of GST exemptions and preferential rates, except for basic food and medicines, a measure that would significantly improve revenues, the report added.
Greater inter-provincial harmonization and coordination of GST will also simplify filing procedures and increase compliance.