The International Monetary Fund (IMF) has expressed satisfaction with the measures and reforms implemented by Pakistan to keep the economy on track. This paves the way for the approval of a $1 billion loan from international financial institutions, sources in the Ministry of Finance said on Friday.
The IMF conducted a two-week visit to review Pakistan’s six-month economic performance.
During this period, several measures were taken, including addressing the thorny issue of agricultural tax imposed by all provinces and reducing subsidies in the energy sector.
The government has assured the IMF that it will collect taxes from the provinces, including imposing corporate tax on farm income.
Nathan Porter led the IMF team and met with officials from the Ministry of Finance, Ministry of Energy, Commerce, Federal Board of Revenue, State Bank of Pakistan, provincial officials, and foreign diplomats stationed in Pakistan.
The government has formulated rules and regulations for the agriculture sector, and the civil service act and right-sizing plan have also been presented to the IMF team.
Following the completion of the meetings, the IMF team will submit their presentation to the Board of Directors, who will review the assessment and decide on the approval of the $1 billion loan.
The IMF has urged the government to broaden the tax net by including retail, wholesale, dealers, and the real estate sector. While the IMF appreciated the rules governing agricultural tax, it asked the government to expedite tax collection.
The government proposed reducing tax rates on various sectors, including real estate and property transactions, to increase revenue collection and help prevent capital flight.
The government presented the latest data on tax filers, which has surpassed six million, a figure appreciated by the IMF. The government aims to further increase this number.
The government assured the IMF that it would provide much-needed protection to the social sector and take steps to reduce circular debt and losses incurred by state-run companies. Additionally, the government plans to accelerate the privatization process.
Moreover, the government informed the IMF that it would reduce subsidies in the energy sector, privatize companies in the power sector, and speed up the privatization of PIAC.
