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Shehbaz led Govt to slap Rs.215 bn new taxes for securing IMF deal

ISLAMABAD (Eshfak Mughal):- The Prime Minister shehbaz Sharif led Federal Government has decided to impose Rs215 billion new taxes to securing the International Monetary Fund (IMF) deal which is going to expire just after 6 days.

In a last-ditch effort to clinch a stalled rescue package with the IMF, the government has agreed to introduce a number of changes to its budget for the fiscal year 2024, confirmed Finance Minister Ishaq Dar on the floor of the National Assembly.

“Pakistan and the IMF had detailed negotiations as a last effort to complete the pending review,” he told the parliamentarians on Saturday.

For the fiscal year starting next month, the government will raise a further Rs215 billion in new tax and cut Rs85 billion in spending, as well as a number of other measures to shrink the fiscal deficit, the financial czar added.

The target of the FBR has been increased by Rs.215 billion from Rs9200 billion to Rs9415 billion for the next fiscal year in compliance of the IMF, sources told the scribe.  

The sources further said that the govt has slapped Rs415 billion new taxes in the new budget including Rs200 billion in budget speech and Rs.215 billion in compliance of the IMF.

The government has decided to raise Rs45 billion through increases in transactions of property tax from one percent to two percent, sources.

The Federal Excises Duty (FED) has been slapped on 5 percent on fertilizer in new budget, sources said. The government wants to increase Rs35 billion through this FED in compliance of the IMF, sources said.  The govt has increased 2.5 percent tax on the income slab of Rs.0.24 million per year for next fiscal year, sources said.

The review came a day after Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris.

About a week remains before the IMF’s Extended Fund Facility (EFF) agreed in 2019 expires on June 30.

Under the $6.5 billion facility’s ninth review, negotiated earlier this year, Pakistan has been trying to secure $1.1 billion of funding stalled since November.

Giving details, Dar said: “Pakistan has agreed on Rs215 billion taxes after three-day parleys with the officials of the IMF to complete the 9th review under the EFF, pending due to the country’s external financing gap.”

“As a result of the talks with the IMF, for the fiscal year 2023-24, the final taxes of only Rs215 have been agreed, ensuring that it will not burden the poor and middle segments of the society,” he said while winding up general discussion on the budget for the year 2023-24.

Pakistan, he further said, would bring down the running expenditure by Rs85 billion, which would have no impact on the proposed development budget, the raise in salaries and pensions of the federal government employees.

He said the government held talks with the Washington-based lender with complete sincerity and assured the parliament that once the things with the international lender were settled; all details would be made public by placing the agreement on the official website of the Ministry of Finance.

Resultantly, he said the proposed tax collection target of the Federal Board of Revenue (FBR) had been increased from Rs.9.2 trillion to Rs.9.415 trillion, with the provincial share going up from Rs.5.276 trillion to Rs.5.390 trillion, the federal government total expenditure estimate from Rs.14.460 trillion to Rs.14.480 trillion and pension estimate from Rs.761 billion to Rs.801 billion.

Similarly, he said the subsidy estimate would be at Rs 1.064 trillion and grants at Rs 1.405 trillion, adding as a result of all these measures, the overall budget deficit would come down with a cushion of Rs 300 billion due to Rs.215 billion taxes and Rs.85 billion reduction in running expenditures.

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