Pakistan tells IMF it will either add more taxes or increase tax rates in next fiscal year

ISLAMABAD: The Pakistani government has assured the International Monetary Fund (IMF) that it will either impose additional taxes worth Rs1,300-1,400 billion or increase the current tax rates, during the next fiscal year, to enhance revenue.

Authorities assured the IMF that Pakistan will set its tax collection target at Rs6,000 billion in the next fiscal year, adding that the tax collection targets for the current fiscal year will not be met.

Pakistan also told the international money lender that its current tax collection targets will not increase beyond Rs4,600 billion.

On the cost of electricity, the government said its price will increase by Rs4.97 per unit during three months of the current fiscal year.

IMF Mission Chief for Pakistan Ernesto Ramirez-Rigo said Pakistan will have to take concrete steps to enhance its revenue.

He was assured that the government will increase revenue under the petroleum levy from Rs450 billion to Rs511 billion. Pakistan said that in the next fiscal year, this figure will increase to more than Rs600 billion.

The government told the IMF delegation that the total outlay of the budget for the next financial year will be Rs7,700 billion, adding that Pakistan will pay Rs3,100 billion in repayment of loans and the interest on those loans.

The IMF was told that Pakistan will allocate Rs627 billion for development programmes in its upcoming budget and that the country will increase its ratio of taxes to GDP by an additional 3%.

The government will also waive tax exemptions on food items, education and medicines.

IMF report says Pakistan’s unemployment rate, inflation to increase this year

On Thursday, the IMF cast a shadow over Pakistan’s economy in its recent report, saying the country’s unemployment and inflation will increase this year.

This was stated in the international money lender’s report on Pakistan’s economy. It had said the country’s growth rate is expected to be 1.5% this year, while the government has forecast its growth rate as 2.1%.

The unemployment rate in Pakistan is predicted by the IMF report to increase by 1.5% during the current fiscal year.

The State Bank had forecast Pakistan’s growth rate at 3%, the report ha said, adding that the World Bank, on the other hand, has projected Pakistan’s growth rate to be 1.3%.

The IMF and the government’s figures were also contradictory to one another when it came to inflation. As per the report, the government has projected the inflation rate to be at 6.5% during the current fiscal year, while the IMF projects it to be at 8.7%.

The IMF has projected Pakistan’s current account deficit to remain at 1.5% of the country’s gross domestic product (GDP), while the government has projected it to be 1.6% of the GDP this fiscal year.

The international money lender said Pakistan’s growth rate will improve to 4% in the next fiscal year.

Pakistan’s economy will grow faster than 2021 forecast, says Hammad Azhar

A couple of days earlier, Finance Minister Hammad Azhar had said Pakistan’s economy “will grow faster than forecast this year”.

Azhar, who also heads the Ministry of Industries & Production, had said Pakistan’s growth target for the next fiscal year would be set at more than 4%.

“We will bring concrete programmes to increase the tax net,” he had said, adding that the PTI-led federal government would also prioritise expanding the scope of the tax system.

The federal minister had vowed to continue the crackdown on tax evasion, saying the government was “confident of achieving our targets”.

“This year is seeing a fantastic increase in the revenue,” Azhar had said, adding that the economic production would grow on the basis of stability in the country.