The IMF created a larger gap of about Rs 900 billion, equal to 1 percent of gross domestic product (GDP).
ISLAMABAD: The International Monetary Fund (IMF) and the Pakistan government are deadlocked. Over a financial gap of Rs 900 billion, a major obstacle to a staff-level agreement, Geo News reported.
The IMF created a larger gap of about Rs 900 billion, equal to 1 percent of gross domestic product (GDP).
The IMF is asking to raise the GST rate from 17 to 18 percent to 17 percent or 17 percent GST on petroleum. oil and lubricants (POL) products, Geo News reported.
Meanwhile, Pakistan is competing with the fiscal gap to meet the primary deficit. Pakistani authorities have asked the IMF to include reduction. Inflows under the Revised Circular Debt Management Plan (CDMP). And cut the required extra subsidy amount to Rs 605 billion against the earlier target of Rs 687 billion.
Hence, the fiscal gap stands at between Rs 400 billion and 450 billion.
Further, top officials have completely denied any possibility. Of IMF conditions of Pakistan Tehreek-e-Insaf (PTI) Chairman. Imran Khan’s signature to revive the funding program. And said that there was no such discussion with the IMF review mission, Geo reported news.
“During technical level discussions Pakistan and the visiting. IMF review mission still disagree on exact fiscal gap assessment. Once this is finalized with the IMF. Then extra tax arrangements will be made. Which will be unveiled through the upcoming mini.” Budget. Given the lack of consensus on fiscal gap figures. Technical-level talks are expected to continue on Monday. And then policy-level talks are expected to begin from Tuesday.” Sources confirmed while talking to a select group of reporters. On the sidelines of the Saturday talks.
They said the government had agreed in principle. With the IMF to scrap tariff subsidies on electricity. And gas for the export-oriented sector. As such dole outs were totally unacceptable to the lender.
Major changes will be made to exporters’ schemes, the official said, Geo News reported.
Pakistani authorities have admitted. That the power sector has so far been a major hurdle in achieving smooth sailing.
Yet, circular debt also remains a problem area for the gas sector, Geo News reported.
The extra spending will breach the overall budget deficit target of 4.9 percent of GDP. Which is likely to reach 6.5 to 7 percent in the current fiscal year.
Meanwhile, the government is set to impose a flood tax on imports as well as the rich. Impose a 41 percent tax on banking sector profits. Hike Federal Excise Duty (FED) rates on cigarettes. Sugary drinks from 13 to 17 percent, property transactions, foreign air travel. and increases the rate of duty on others.
The IMF has assessed that the FBR will face a shortfall of Rs 130 billion in achieving. The target of Rs 7,470 billion, Geo News reported.
The two sides are expected to strike a staff-level agreement by the end of talks on February 9. The IMF’s Executive Board will then consider approval of the next step, likely in March 2023.
