Pakistan to lock deal with International Monetary Funds tomorrow: Finance Ministry

Earlier on Friday, the Shehbaz Sharif government increased the tax rates for the salaried class to fulfil the demand of the IMF.
Pakistan flag. (Photo | AFP)
Pakistan flag. (Photo | AFP)

ISLAMABAD: Pakistan's Finance Ministry on Sunday said that their deal with International Monetary Funds (IMF) will be sealed by Monday as the organisation plans to hand over the economic and financial policy for the renewed deal providing economic relief package to Islamabad.

Pakistan Finance Minister Miftah Ismail in the National Assembly said that although the country is common with the negative comments made by the financial quarters it looks very likely that the restoration of the IMF programme is in the offing.

Moreover, Prime Minister Shehbaz Sharif had asserted that the terms with the International Monetary Fund (IMF) had been finalised and the deal will close soon, barring any other conditions set by the global lender.

Earlier on Friday, the Shehbaz Sharif government increased the tax rates for the salaried class to fulfil the demand of the IMF. It had withdrawn the tax relief to the salaried class announced on June 10 and the Federal Board of Revenue (FBR's) collection target was increased to Rs 7,470 billion, reported Geo News.

On Personal Income Tax (PIT), the government raised a tax amount of Rs 80 billion as first, the government abolished tax relief of Rs 47 billion and then raised a tax amount of Rs 35 billion, so the FBR was going to collect Rs 235 billion from salaried class in the next budget against a collection of Rs 200 billion in the outgoing fiscal year.

The Ministry of Finance high-ups disclosed that all IMF's demands on the fiscal front were almost fulfilled and now it was expected that the Fund staff would share a draft of the Memorandum of Financial and Economic Policies (MEFP) next week on Monday.

The IMF and the Ministry of Finance as well as the State Bank of Pakistan are holding parleys continuously. Finance Minister Miftah Ismail also chaired a meeting related to the government's strategy for hiking power tariffs, reported Geo News.

The government slapped a 10 per cent super tax on 13 big industries including cement, sugar, steel, oil and gas, RLNG Terminal, textiles, banking, auto industry, tobacco, fertiliser, aviation, chemicals and beverages.

The Fund has objected to the government's estimates of allocating Rs 225 billion for Price Differential Claims (PDCs) for the next budget as the IMF assessed that it might escalate to over Rs 350 to Rs 450 billion.

The government has proposed a tax on jewellery shops as on-premises of shops, it has been fixed at Rs 40,000 per shop of jewellery. There are nearly 30,000 jewellery shops and only a few shops are registered. The Withholding Tax on the sale of gold by consumers was cut to 1 per cent from 4 per cent, reported Geo News.

The Imran Khan-led PTI government had made a commitment with the IMF for raising the tax amount of Rs 335 billion through an increased rate of slabs for the salaried class but the PDM-led coalition government convinced the IMF for collecting Rs 100 billion less than agreed by the previous PTI-led government with the IMF.

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