The federal government Monday announced that the petroleum development levy (PDL) will increase by Rs. 4 every month following an agreement with the International Monetary Fund (IMF).
This was announced by Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin and Minister for Energy Hammad Azhar at a press conference in Islamabad.
The finance adviser said that the Petroleum Development Levy (PDL) on petrol will have to be increased by Rs. 4 every month to take it to Rs. 30. Tarin said that IMF had demanded Pakistan to raise revenue of Rs. 600 billion through PDL. However, after prolonged negotiations, it agreed to reduce the tax target of PDL to around Rs. 356 billion.
Tarin said negotiations between Pakistan and the IMF have successfully reached an understanding under which the IMF will provide $1 billion to Pakistan. He said the Fund has appreciated Pakistan’s reforms in various sectors. He added that the IMF emphasizes the need for more transparency in the governance of state-owned enterprises, reforms for public finance and evolving tax laws to facilitate businesses. He said the IMF also appreciated the Ehsaas Program and Kamyab Jawan Program.
The adviser said the IMF has also recommended some prior actions, including the imposition of petroleum levy, passing of the legislation on State Bank of Pakistan (SBP), audit of Covid-19 expenditures, and the detail of beneficial owners of coronavirus vaccine manufacturing companies.
He further stated that the government and IMF have also agreed on the draft of SBP autonomy. The government would give autonomy to SBP in making monetary policy, exchange rate policy, and stability in prices.
In addition, the central bank will be answerable to the parliament like other organizations and all the National Accountability Bureau (NAB) laws would be applicable to the SBP.
The revenue target of the Federal Board of Revenue (FBR) has also been revised to Rs. 6.1 trillion from Rs. 5.9 trillion.
The Public Sector Development Program (PSDP) would be reduced from Rs. 900 billion to Rs. 700 billion.
Speaking on the occasion, Hammad Azhar said there will be no impact on the seasonal energy package for winter and industrial tariff as a result of prior action recommended by the IMF. He hinted at a minimal increase in electricity tariff after a few months. He also expressed hope that there will be more economic stability after this program.
The minister said that the IMF has appreciated the performance of the ministry with regard to the decrease in circular debt.