Islamabad, May 11, 2024: Pakistan has pledged not to launch any tax amnesty schemes in fiscal year 2024-25 as part of its commitment to bolster the country’s fiscal sustainability and ensure continuous fiscal consolidation.
This announcement comes in the wake of a letter of intent submitted to the International Monetary Fund (IMF), reaffirming Pakistan’s dedication to fiscal discipline and debt reduction.
The letter of intent underscores the importance of strengthening Pakistan’s fiscal sustainability to address debt vulnerabilities and reduce crowding out, thereby supporting monetary policy efforts to curb inflation. Key highlights of Pakistan’s commitment include:
1. Fiscal Targets: Pakistan aims to achieve the fiscal year 2024 general government primary balance target of PRs 401 billion (0.4 percent of GDP), excluding grants. The government will collaborate closely with provincial authorities to ensure the delivery of agreed fiscal surpluses.
2. Continued Consolidation: Fiscal consolidation efforts will persist in the fiscal year 2025 budget, with the goal of reaching a general government primary surplus of 1.0 percent of GDP. This consolidation will extend into subsequent years to maintain fiscal discipline.
3. Revenue Mobilization: The government plans to mobilize additional revenue through policy reforms aimed at broadening the tax base, particularly in undertaxed sectors. Initiatives to enhance revenue administration and incentivize provincial fiscal efforts will be prioritized. Measures such as implementing a new scheme to register and collect taxes from non-filing supply chain operators and retailers of goods and services have already been initiated.
4. FBR Reform Plans: Pakistan will finalize reform plans for the Federal Board of Revenue (FBR), drawing on proposals prepared by the caretaker government and aligning with international best practices. Digitalization initiatives will also be pursued to improve transparency, client experience, and revenue collection processes.
5. Budget Process Strengthening: Efforts to enhance the credibility, transparency, and efficiency of the budget process will be intensified. The government commits to refraining from the use of supplementary grants, recognizing their potential to undermine fiscal discipline.
6. Guarantees and Tax Amnesties: Guarantees will be limited to predetermined amounts, and no further tax amnesties or preferential tax treatments will be granted in fiscal years 2024 or 2025 without prior approval from the National Assembly.
Pakistan’s commitment to refraining from tax amnesties reflects its determination to pursue sustainable fiscal policies and strengthen economic resilience. By prioritizing revenue mobilization, fiscal consolidation, and institutional reforms, Pakistan aims to build a stable economic foundation conducive to long-term growth and development.
As the government works in tandem with international partners and domestic stakeholders to implement these measures, the focus remains on fostering a conducive environment for investment, promoting fiscal prudence, and ensuring equitable economic opportunities for all citizens.