IMF says Pakistan 'missed' opportunity to broaden tax base

The International Monetary Fund (IMF) on Thursday expressed dissatisfaction with Pakistan’s recently presented budget, ARY News reported.

Pakistan has barely enough currency reserves to cover one month’s imports. It had hoped to have $1.1 billion of the funds released in November – but the IMF has insisted on a number of conditions before it makes any more disbursements.

Policy talks are underway with Pakistan. However, the draft FY24 Budget ‘misses’ an opportunity to broaden the tax base in a more progressive way, Esther Perez Ruiz, the International Monetary Fund’s resident representative for Pakistan said.

Esther Perez Ruiz further added that the long list of new tax expenditures further reduces the fairness of the tax system and undercuts the resources needed for vulnerable recipients in the Benazir Income Support Programme.

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“The new tax amnesty runs against program’s conditionality and governance agenda and creates a damaging precedent,” added Perez Ruiz.

She said that measures to address the energy sector’s liquidity pressures could be included alongside the broader budget strategy.

“The IMF team stands ready to work with the government in refining this Budget ahead of its passage,” she added.

Earlier, US Finance Secretary Janet Yellen said that Washington supports International Monetary Fund (IMF) program for Pakistan.