Pakistan’s Finance Minister, Ishaq Dar, announced that the country’s recent talks with the International Monetary Fund (IMF) have ended “positively” and that the government will need to impose Rs170 billion in taxes through a mini-budget to revive the loan program.
Dar stated that the agreement is the same one signed by former Prime Minister Imran Khan with the IMF in 2019-2020 and that the government is committed to reaching a “sovereign commitment.” The 10-day talks covered various sectors, including power, gas, fiscal, and monetary, and Dar reported that the Rs170 billion in taxes will have to be recovered within four months of the current fiscal year.
The minister also said that reforms are necessary for the country and that the Prime Minister, Shehbaz Sharif, has given assurance to the IMF that the government will implement these reforms.
Dar mentioned that the economy is currently struggling, ranked 47th globally, and that reforms are needed to fix the economic devastation caused by mismanagement.
He stated that the main focus of the energy sector reforms is to control the flow of circular debt, and that the circular debt in the gas sector will be brought to zero while untargeted subsidies will be reduced.
The finance minister also spoke about the power sector, stating that despite spending Rs3,000 billion on electricity generation, only Rs1,800 billion is being recovered.
In terms of the depleting forex reserves, Dar reassured that they will be boosted and managed by the State Bank of Pakistan, with the help of friendly countries.
He also announced an increase in the budget of the Benazir Income Support Program (BISP) by Rs40 billion to Rs400 billion to ease the burden of inflation on vulnerable segments of society.
Dar blamed the previous government for the credibility gap with the IMF and stated that the IMF does not trust Pakistan due to a lack of reform implementation and reversals during a no-confidence motion.
However, the government has refused to impose a sales tax on petrol, and the IMF agreed to this, with general sales taxes being added to the Rs170 billion.
Dar added that the Memorandum of Economic and Financial Policies (MEFP) draft has been received by the government and that a virtual meeting with the IMF will be held on Monday.
