IMF 'pushes' Pakistan to increase revenue, reduce expenses

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) are currently engaged in economic review talks, focusing on the country’s performance in the current fiscal year and setting goals for the next fiscal year, ARY News reported citing sources.

According to sources, the discussions are centered on implementing economic reforms, increasing revenue, and reducing expenditures.

Sources revealed that the IMF has emphasized the need to boost revenue and cut costs, with a proposed tax revenue target of over Rs 15 trillion for the next fiscal year. Additionally, the tax-to-GDP ratio is expected to increase to 13%.

Non-tax revenue is estimated to reach Rs 2,745 billion in the next fiscal year. Pakistan’s economic growth is expected to surpass 4% in the next fiscal year, while the current fiscal year’s growth is likely to be limited to around 3.5%.

Inflation is expected to remain in single digits next year. Pakistan’s external financing needs are estimated to exceed $20 billion. The country is also expected to roll over deposits from friendly countries in the next fiscal year.

Read More: Pakistan, IMF begin policy talks for $1 billion loan tranche

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.

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 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.