Pakistan has agreed to take Rs800 billion measures through a combination of cut in expenditures and slapping about Rs500 billion in taxes, including Rs20 per litre fuel tax, to revive the stalled $6 billion International Monetary Fund (IMF) programme.
“The tax collection target of the Federal Board of Revenue (FBR) has been increased to Rs6.1 trillion – an addition of roughly Rs300 billion – and the government will also have to get the State Bank of Pakistan amendment bill approved from parliament,” Finance Adviser Shaukat Tarin said on Monday.
While revealing what the government will have to do in less than two months, Tarin did not hide details of what sounded like very harsh IMF conditions which, if implemented in letter and spirit, would not only consume significant political capital but also unleash another wave of inflation.
“Price stability, exchange rate of the rupee and the level of the interest rate will be the responsibility of the central bank in which the government will have no role,” Tarin told reporters, while sharing details of what had been agreed with the IMF in the name of the SBP autonomy.
“There will also be another increase in power tariff in the next few months, currently estimated to be increased by about 50 paisa per unit but its exact quantum will be determined at the level of circular debt,” said Energy Minister Hammad Azhar, while speaking at the news conference.
Since February, the government has already increased the base tariff by Rs3.63 per unit in two phases.
Tarin and Hammad spoke to the media hours after an announcement by the IMF about the measures that Pakistan would have to take to secure approval of the $1 billion loan tranche. Tarin said once all the conditions were met, the IMF board would meet in January to approve the sixth review of the economy.
“The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the 6th review under the EFF,” according to a statement issued by the IMF from Washington on Monday morning.
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“The tax collection target of the Federal Board of Revenue (FBR) has been increased to Rs6.1 trillion – an addition of roughly Rs300 billion – and the government will also have to get the State Bank of Pakistan amendment bill approved from parliament,” Finance Adviser Shaukat Tarin said on Monday.
While revealing what the government will have to do in less than two months, Tarin did not hide details of what sounded like very harsh IMF conditions which, if implemented in letter and spirit, would not only consume significant political capital but also unleash another wave of inflation.
“Price stability, exchange rate of the rupee and the level of the interest rate will be the responsibility of the central bank in which the government will have no role,” Tarin told reporters, while sharing details of what had been agreed with the IMF in the name of the SBP autonomy.
“There will also be another increase in power tariff in the next few months, currently estimated to be increased by about 50 paisa per unit but its exact quantum will be determined at the level of circular debt,” said Energy Minister Hammad Azhar, while speaking at the news conference.
Since February, the government has already increased the base tariff by Rs3.63 per unit in two phases.
Tarin and Hammad spoke to the media hours after an announcement by the IMF about the measures that Pakistan would have to take to secure approval of the $1 billion loan tranche. Tarin said once all the conditions were met, the IMF board would meet in January to approve the sixth review of the economy.
“The Pakistani authorities and IMF staff have reached a staff-level agreement on policies and reforms needed to complete the 6th review under the EFF,” according to a statement issued by the IMF from Washington on Monday morning.
Islamabad swallows bitter IMF pills | The Express Tribune
Tarin says measures worth Rs800b, approval of SBP bill restore IMF deal
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