Cut Spending or Raise Taxes? IMF Leaves ‘Everything’ to Pakistan

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The International Monetary Fund (IMF) has granted Pakistan considerable leeway by not imposing any particular constraints on tax rates, privatization processes, or energy price adjustments.

Well-informed sources told ProPakistani that the IMF is adopting a hands-off approach, allowing the government to exercise autonomy in critical economic decisions.

Contrary to past reports, sources said the IMF is not dictating the sale or closure of any state assets during the privatization process. The responsibility for such decisions rests squarely with the government.

Sources said revisions in gas and electricity prices are anticipated but there is no predetermined cap on the extent of these adjustments. This move is seen as a measure to address financial shortfalls effectively.

Moreover, a specific economic task has been assigned, aiming at increasing tax collection by 0.4 percent which can be achieved by an increase in the Gross Domestic Product (GDP). The Federal Board of Revenue (FBR) has shown positive signs of improvement in tax revenue during the last fiscal quarter, encouraging the need for continued tax reform efforts.

Insiders suggested that focusing on revenue generation from Pakistan’s property sector could prove beneficial. However, expectations regarding potential hikes in tax rates remain uncertain at this juncture.

Sources revealed that in order to enhance tax collection, a policy targeting unregistered businesses and income earners has been devised, with the implementation set to commence shortly. This process will be based on bank records and data from the National Database and Registration Authority (NADRA).

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