Pakistan averts mini budget as IMF 'agrees' to lower tax target by Rs600bln

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have reached a consensus to reduce the tax target by Rs600 billion after the Federal Board of Revenue (FBR) successfully improved the tax-to-GDP ratio, ARY News reported on Friday, quoting sources.

Sources confirm that the risk of a mini-budget has been averted with the tax reduction approval by the International Monetary Fund.

Both parties have agreed on necessary amendments to the current fiscal strategy.

The IMF has also demanded the elimination of tax exemptions for the wealthy, urging landlords to pay agricultural income tax and imposing a super tax on major industrialists.

Earlier, it was reported that Pakistan convinced the IMF to slash the electricity rate by two rupees per unit

Pakistan and the IMF have commenced policy-level talks for the disbursement of $1 billion loan tranche under the ongoing loan package.

Read more: IMF ‘pushes’ Pakistan to increase revenue, reduce expenses

The officials held a lengthy session of talks with the IMF team to cut the electricity tariff by 1.5 to two rupees per unit, according to sources.

“Final decision to slash basic tariff of electricity will be held in the next month”. According to sources, the IMF has in principle approved a cut in the basic tariff of electricity.

“Pakistan has to submit a comprehensive privatization plan of distribution companies (Discos) to slash the power tariff,” sources shared.

The IMF has been dissatisfied with the performance of Discos and expressed concern over losses of the power distribution companies.

The IMF team has pointed out below par performance of the distribution companies as the main hurdle in reforms in the energy sector, sources shared.