- Finance Minister Ishaq Dar says government has agreed to impose Rs170 billion in additional taxes
February 11, 2023
ISLAMABAD: Finance Minister Ishaq Dar said on Friday that the government has agreed to impose Rs170 billion in additional taxes, halt the flow of circular debt in the power sector and reduce the circular debt of the gas sector to zero, as well as withdraw untargeted subsidies as prior actions during a 10-day extensive discussion with the International Monetary Fund (IMF) programme staff-level team on 9th review.
Addressing a news conference here Friday along with Minister of State for Finance Aisha Ghaus Pasha, the SAPM on Finance, and others, he stated after reaching an agreement on broad contours of the review, draft memorandum of economic and financial policies (MEFP) is provided to Pakistan and he would go through it over the weekend ahead of virtual meeting with the Fund on Monday.
He added that the final round ended on Thursday and all the matters were agreed following the 10-day extensive discussion with the Fund on power, gas, fiscal, monetary, etc., and meetings were attended by the SBP governor, as well as, relevant heads of Divisions, the FBR, the BISP, power, and others, and subsequently, Fund’s courtesy call was also arranged with Prime Minister Shehbaz Sharif through Zoom meeting, wherein, it was reiterated to implement the agreed reforms.
He said that the prior actions agreed with the Fund included;(i) fiscal measures of Rs170 billion;(ii) reforms in the energy sector with the main thrust to stop the flow of circular debt; (iii) minimising untargeted subsidies; and (iv) flow of circular debt in the gas sector to be reduced to zero from Rs260-270 billion.
Dar said that the fiscal measure would be introduced through Ordinance or bill in the Parliament. He added that the commitment to petroleum levy has almost been fulfilled except Rs10 per litre increase on diesel – to Rs50 from Rs40 – and this would be increased in two installments of Rs5 each from March and April, adding that sales tax on petroleum products was not agreed with the Fund.
The finance minister said that Pakistan would be disbursed US$ 1.2 billion once the review is approved by the Executive Board meeting of the IMF.