Pakistan and the International Monetary Fund (IMF) are scheduled to start in-person talks this week in Washington, D.C., from October 13 to 15.
The discussions will revolve around reviewing Pakistan’s performance under the fund’s $6 billion program. If talks conclude amicably, the International Monetary Fund (IMF) will grant the country another $1 billion loan.
Finance Minister Shaukat Tarin will lead Pakistan’s team in the discussion revolving around the government’s recent revenue collection and financial performance.
Pakistan and the IMF already held virtual meetings last week. During these meetings, the IMF asked the government to raise its revenue collection target for the current fiscal year from $5.8 trillion to $6.3 trillion.
This is to compensate for the Federal Board of Revenue (FBR) not collecting petroleum duties that were intended to raise Rs. 610 billion in revenue.
The IMF suggested raising personal income tax for higher income brackets, removing sales tax exemptions, raising regulatory duties on luxury items, increasing the baseline electricity tariff by Rs. 1.40 per unit, increasing discount rates by 50 to 75 basis points, devaluing the exchange rate to bring it in line with the real effective exchange rate, and further increasing the gas tariff.
During the course of the virtual talks, major major loopholes on the fiscal front were identified and it was pointed out that there was a potential risk of Rs. 862 billion on the fiscal front in the shape of the petroleum levy of Rs. 610 billion and privatization proceeds of fetching Rs. 252 billion during the current fiscal year.
The meeting will not involve discussions on the autonomy of the State Bank of Pakistan (SBP) and the tabled bill.
The spokesperson for Federal Minister for Finance, Muzammil Aslam, said that the talks between the IMF and Pakistan are expected to conclude on 15 October.