Daily Times

The Ministry of Finance on Friday said the coalition government was fully committed to the Internal Monetary Fund (IMF) programme and keen to at least complete the 9th review as it had already taken many difficult and politically costly decisions in that context.

“We are not ‘doctrinaire’ about any element of the FY24 budget and are keenly engaged with the IMF to reach an amicable solution,” the finance ministry said in the statement, adding the government was “fully committed” and “keen” to at least complete the ninth review of a $6 billion IMF programme, which has been stalled since October.

Responding to the statement of IMF’s Resident Representative Ms Esther Perez, the Finance Ministry spokesperson said negotiations with the Fund were going on, however, it would be appropriate to clarify “our position” on some specific issues raised in the press statement.

He said the 9th IMF review was conducted in early February 2023 and the government completed all technical issues at a fast pace. The only outstanding issue was of external financing “which, we understand, was also amicably resolved in the prime minister’s telephonic call of May 19, 2023, with the Managing Director (MD) of IMF”.

The spokesperson said the budget for the financial year 2023-24 was never a part of the 9th Review, however, “in line with the prime minister’s commitment to the IMF MD, we shared the budget numbers with the IMF Mission and we are continuously engaged with them even on the budget”. On the specific issues raised by Ms Esther Perez, he said as far as the broadening of the tax base was concerned, the Federal Board of Revenue (FBR) had added 1,161,000 new tax payers i.e. 26.38% to its tax base in the last 11 months.

“This is an on-going exercise and will continue,” he said, adding 0.6 % advance adjustable withholding tax on cash withdrawals over Rs 50,000 was another big step in that direction. Besides, he said, the tax-exemptions that had been announced in the budget were “triggers” of growth in the real sectors of economy. “This is the sustainable path to provide employment and livelihood to the common citizen. In any case, the amount is fairly small.”

On the Benazir Income Support Programme’s (BISP) allocation, the spokesperson said the pro-poor initiatives in the budget were not limited to the BISP beneficiaries whose budget in any case had been increased from Rs 400 to Rs 450 billion. (This was last raised by the government in February 2023 from Rs 350 to Rs 400 billion.) “There are millions of vulnerable people above the poverty line and the budget provides Rs 35 billion for targeted subsidies on five main items of food consumption through the Utility Stores Corporation for families upto a PMT scorecard 40. This facility is also available for BISP beneficiaries,” he added.

Similarly, he said, as far as the “amnesty” was concerned the only change was to “dollarize” the value of an existing provision of IT Ordinance, which had always been there, was available under its Section 111(4). He said the cap of Rs 10 million (approximately $ 100,000 equivalent) was introduced in the fiscal year 2016. “The cap set in FY 2016 is being resolved in terms of rupee equivalence of $ 100,000,” he added.