IMF Rules Out Suspension of IMF Program for Pakistan Despite Change of Govt

On the seventh review of the International Monetary Fund’s (IMF) program for Pakistan, the talks between Pakistan and the international financial institution will resume once a new government is formed in the country currently passing through what is termed by many as a political crisis.

Sources told ProPakistani that IMF would continue supporting Pakistan, as there was no concept of suspension within IMF programs.

When ProPakistani contacted Esther Perez Ruiz, the Resident Representative of the IMF for Pakistan, she said, “The Fund looks to continue its support to Pakistan and, once a new government is formed, we will engage on policies to promote macroeconomic stability and enquire about intentions vis-a-vis program engagement. There is no concept of suspension within IMF programs.”

In response to media claims that the IMF has suspended talks for its seventh review program for Pakistan, the Finance Ministry tweeted, “Finance Division and IMF remain engaged in data sharing and reform discussions as part of EFF. There is no truth to speculation about suspension of program. IMF has confirmed the same and also clarified that it remains committed to Pakistan’s macroeconomic stability”.

Likewise, the pokesperson Finance Ministry, Muzzammil Aslam tweeted that “the news item related to IMF program is conjectural.”

Likewise, a World Bank representative told ProPakistani, “We are fully committed to supporting the development projects of the Government of Pakistan that are financed by the World Bank, for the benefit of the people of Pakistan. We will continue to support project preparation and implementation of Pakistan’s portfolio with the World Bank, as planned, and in close coordination with authorities.”

It is pertinent to mention here that the IMF had proposed a five percent income tax for people earning in the range of Rs. 50,000 to Rs. 62,500 per month. At present, the government is levying a tax at a rate fixed for an income up to Rs. 100,000 per month.

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

The IMF had come up with a proposal to slap a 20 percent income tax on the monthly income below Rs. 104,000, according to the sources. The 20 percent tax rate is currently charged to the people earning nearly Rs. 417,000.

The IMF’s most aggressive proposal was to slap a single tax rate of 30 percent on people having a monthly income above Rs. 104,000 and up 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 had proposed a 35 percent income tax. Currently, a 35 percent tax is levied on the income tax group earns over Rs. 7.25 million per month.

The IMF was also insisting that pensions should be taxed, either at the contribution stage or at the withdrawal stage. Despite these differences٫, it seems as if IMF did not wind up the engagements with Pakistan and said that it wanted to continue its support to Pakistan.