Islamabad: Finance Minister Muhammad Aurangzeb has announced that the size of the new International Monetary Fund (IMF) Extended Fund Facility (EFF) for Pakistan will be determined within a week.
Speaking after a meeting of the National Assembly Standing Committee on Finance, Aurangzeb indicated that Pakistan would also request the IMF for an augmentation of the EFF through the Resilience and Sustainability Facility (RSF) at a later stage.
Aurangzeb revealed that the EFF under discussion ranges between $6-8 billion, but the exact amount has yet to be finalized. He assured that nearly all of the IMF’s prerequisites for the next program have been met and expressed hope that an agreement would be reached within the current month. He also mentioned a tentative understanding with provincial authorities regarding the taxation of agricultural income.
During the finance committee meeting, Aurangzeb highlighted improvements in economic indicators over the last fiscal year, noting a decrease in inflation. He responded to committee members’ queries by confirming that there are no longer any restrictions on imports.
Aurangzeb emphasized the government’s goal to increase the tax-to-GDP ratio to 13%, stressing that the current ratio of 9% is unsustainable for the country. He expressed gratitude to provincial finance ministers for agreeing in principle to the taxation of agricultural income.
The finance minister underscored the importance of broadening the tax base, aligning with IMF expectations that all income sources be taxed. He pledged to enhance public trust in the Federal Board of Revenue (FBR), highlighting that Rs60 billion in additional refunds were issued in the last financial year.
Aurangzeb also discussed the significant expenditures on interest payments and government operations, pointing out the need for promoting public-private partnerships in the development budget. He conveyed optimism regarding the ongoing negotiations with the IMF, reiterating that a formal agreement is expected to be reached this month.
In summary, Pakistan’s finance minister provided a comprehensive update on the country’s economic progress and the status of discussions with the IMF. With the proposed EFF size to be finalized soon and a focus on tax reforms, the government aims to bolster economic stability and growth. The forthcoming IMF agreement is anticipated to play a crucial role in achieving these objectives, marking a significant step forward for Pakistan’s financial strategy.