Daily Times

With envisaging CPI-based inflation on the higher average rate of 12.7% for the next budget 2024-25, the International Monetary Fund (IMF) has asked Pakistan to share the draft of the under preparation investment policy and ensure transparency in working of the much-hyped Special Investment Facilitation Council (SIFC).

The Washington-based lender has also inquired about the tax exemptions offered by the government for the upcoming Special Economic Zones (SEZs) under the China-Pakistan Economic Corridor (CPEC).

On non-tax revenue target, the IMF wants maximisation of non-tax revenues as the proposal under consideration is to increase the Petroleum Development Levy (PDL) for increasing collection up to Rs1.08 trillion in the next fiscal year or slap Carbon levy to compensate the zero rate of GST on petroleum products.

The IMF has recommended slapping 18% GST on petrol and diesel along with PDL. Still, the government is exploring the option to impose a levy so that it should not become part of the federal divisible pool (FDP) under the NFC Award thus not going to be distributed with the provinces.

The visiting IMF team, which is a sort of an assessment mission, has not yet converted ongoing engagement into formal talks with Pakistani authorities for clinching a fresh bailout package under medium Extended Fund Facility (EFF).

Both sides possessed divergent views on the macroeconomic framework for the next fiscal budget for 2024-25. The IMF has refused to accept the macroeconomic framework of the Finance Ministry and so far pitched the macroeconomic framework for the next budget 2024-25 including real GDP growth rate at 3.5%t while the CPI based inflation was projected on higher side at 12.7%.

The Ministry of Finance has prepared a macroeconomic framework whereby the GDP growth was envisaged at 3.7 to 4% while inflation was kept on average in the range of 11 to 12%.

For the outgoing fiscal year 2023-24, the provision GDP growth figure may hover around 2 to 2.5% of GDP against the official target of 3.5%.