IMF Talks in Standstill as Govt Disagrees on 4 Crucial Issues

Disagreement on four critical issues has become an impediment in the successful conclusion of the ongoing seventh review meeting between Pakistan and the International Monetary Fund (IMF).

Sources said that increase in income tax rates, tax on pensioners, tax amnesty for the industrial sector, and the PM Relief package on electricity and fuel are the main factors that are delaying the successful conclusion of the 7th review, which started on 4 March 2022.

According to sources, the Pakistan side led by Finance Minister, Shaukat Tarin, could not convince the IMF staff on two important issues, which are PM Relief Package and tax amnesty scheme. The PTI  Government has reached the point of no return on the issue of the PM Relief package as it cannot retract it due to political consequences.

The government is also opposing IMF’s proposal to increase the income tax rates, which is also a very harsh decision. The sources further told that the IMF proposed a five percent tax for people earning in the range of Rs. 50,000 to Rs. 62,500 per month.

Currently٫ the government is charging 5 percent for income up to Rs. 100,000 per month. For the income group having a monthly income of up to Rs. 79,000, the IMF has proposed a 10 percent income tax rate. Currently٫ the government is charging this rate to only those who earn up to Rs. 150,000 a month.

The IMF has also proposed to slap 20 percent income tax on the monthly income in the range of Rs. 104,000, according to the sources. The 20 percent tax rate is currently imposed on individuals earning nearly Rs. 417,000.

The IMF’s most aggressive proposal was to slap a single tax rate of 30 percent on people having monthly income above Rs. 104,000 to Rs. 1 million, said the sources.

Currently, the 30 percent tax rate is collected from those who earn up to Rs. 4.17 million a month.

For people earning over Rs. 1 million a month, the IMF has proposed a 35 percent income tax, but it will only affect 6,000 individuals. Currently, 35 percent tax is levied on the income tax group that earns over Rs. 7.25 million per month.

Pakistan has not yet accepted the IMF’s proposal due to its adverse political, economic, and social impact. Compared to these rates, the sources said that the government proposed a 10 percent income tax for people earning up to Rs. 100,000 a month. For those who earn over Rs. 100,000 to Rs. 333,000 a month, the FBR has suggested a 15 percent income tax.

The FBR has proposed that the tax rate for those earning up to Rs. 666,000 should be 20 percent. According to the FBR recommendation, the tax rate for people earning up to Rs. 1.25 million a month should be 30 percent.

It has recommended a 32.5 percent tax rate for those earning Rs. 2.5 million a month and 35 percent for the individuals having monthly income of above Rs. 2.5 million.

Currently, the 35 percent rate is collected from those who earn over Rs. 6.25 million a month. Sources said that in addition to the disagreement over the salaried class taxation, both sides also could not converge on the issue of taxing the pensioners.

The IMF is also insisting that pensions should be taxed, either at the contribution stage or at the withdrawal stage.

Contrary to this, the Ministry of Finance is claiming that “negotiations under the seventh review are continuing as planned and the two sides remain engaged on a regular basis at a technical level through virtual meetings and data sharing.”

The vote of no-confidence move in parliament is also one reason to slow down the negotiations as if the premier loses the majority, the Fund will have to wait for the new government.


  • 파키스탄은 왜 항상 imf에 가나요? 그들은 재정을 관리할 수 없습니까?


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