With the start of policy-level parleys on Monday, Pakistan and the IMF have agreed to revise the fiscal and external framework to strike a staff-level agreement under the $3 billion Standby Arrangement (SBA) program.
The policy-level parleys will conclude on Wednesday (tomorrow). The IMF has so far expressed concern over the exchange rate in a free market-based mechanism, materializing all required dollar inflows and hiking electricity and gas tariffs.
The current account deficit is expected to be reduced, so import compression will be used slightly to minimize the external financing gap.
The government will have to hike the gas tariff in line with the calculation worked out by the regulator. The electricity tariff in line with fuel price adjustment and quarterly tariff adjustment will have to be increased. The FBR’s envisaged tax collection target was proposed to remain unchanged at Rs 9.415 trillion. However, the IMF asks for Plan B in case of revenue shortfall in the current fiscal year.
In a separate meeting, Caretaker Prime Minister Anwaar-ul-Haq Kakar approved five significant steps to overhaul the taxation system and broaden the tax base to bring 1.5 million new taxpayers into the tax net.
