Daily Times

As Pakistan and the International Monetary Fund (IMF) conclude their final round of negotiations today, the government has successfully assured the global lender that no mini-budget will be introduced before June’s end.

According to Finance Ministry officials, the IMF has expressed satisfaction with Pakistan’s economic performance, clearing the way for the release of the next $1 billion tranche under the $7 billion loan program.

IMF’s Focus on Tax Reforms

Sources familiar with the discussions revealed that IMF officials, led by Nathan Porter, engaged in extensive meetings with Federal Finance Minister Muhammad Aurangzeb. The review covered Pakistan’s economic performance in the first half of the fiscal year and future policy objectives. The IMF reiterated its demand for expanding the tax base, particularly targeting the retail, wholesale, real estate, and dealership sectors to ensure sustainable revenue generation.

During the discussions, the Federal Board of Revenue (FBR) successfully demonstrated an improved tax-to-GDP ratio, convincing the IMF to lower the annual tax revenue target from Rs 12,970 billion to Rs 12,370 billion. This adjustment eased concerns about the need for a mini-budget.

Taxation Measures and Policy Shifts

Despite this relief, the IMF has emphasized the need to eliminate tax exemptions for wealthy elites, particularly in agriculture and industry. Large landowners will now be taxed under an agricultural income tax framework, while high-earning industrialists will be subjected to a super tax. The IMF acknowledged the government’s legislative efforts in these areas but urged swift implementation.

Additionally, the government proposed reducing tax rates in the real estate and property sectors to prevent capital flight and retain investments. Authorities also assured the IMF of ongoing efforts to register traders and expand the tax net in the services sector, including professionals. The FBR has provided a written commitment to the IMF regarding these measures.