IMF bars Pakistan from future amnesty schemes on tax or assets

ISLAMABAD: The International Monetary Fund (IMF) in a report clearly stated that Pakistan would not hold another tax amnesty scheme or an asset declaration scheme in the future, ARY News reported on Tuesday.

The federal government had introduced the Asset Declaration Scheme; The IMF had opposed the Asset Declaration Scheme and said it was “unfair” as it discouraged taxpayers.

In May, the IMF and Pakistan reached a staff-level agreement on economic policies for a three-year extended fund facility in May.

Under the agreement, Pakistan will receive about US$6 billion for a period of 39 months.

The IMF in its press release had said that it aims to support the federal government’s structural reform agenda during the next three years.

The agreement signed with the IMF by Adviser to the Prime Minister on Finance Abdul Hafeez Shaikh and State Bank of Pakistan Governor Reza Baqir also requires an increase in electricity tariff again in August this year and ensures Rs1.3tr refunds from the provinces out of the National Finance Commission share to honour its commitments with the IMF.

The projections contained in the document show that the authorities have promised to increase FBR’s total tax collection from Rs3.94tr last year to Rs5.5tr this year and to Rs10.5tr by 2023-24, a cumulative increase of Rs6.564tr in five years. As such, the tax-to-GDP ratio is forecast to soar to 15.3 per cent from 10.4pc this year.

The data contained in the document also shows that China has now become the largest holder of Pakistani debt. Of the $85.482bn in total external debt and liabilities of the government, slightly over one quarter of it at $21.891bn is owed to China through a combination of bilateral and commercial loans.

The Fund programme requires Pakistan to repay up to $37.359bn on its external debt by the end of the programme, of which nearly 40pc at $14.682bn will be paid to China. The commercial component of debt owed to China is to be brought to zero by the programme end, whereas the bilateral debt will be reduced from $15.155bn today to $7.946 by the programme end.

The government has also given an undertaking to privatise at least seven small state-run entities in the short run and rollout by September 2020 a complete roadmap for the remaining entities that will detail which ones are to be privatised and which ones to be improved upon.

The authorities have given an undertaking to the IMF that Pakistan had received firm commitments from China, Saudi Arabia and the UAE to keep rolling over their existing loans over the course of the programme.