Pakistan and the International Monetary Fund (IMF) have reached a board agreement, leading to the revival of the extended fund facility (EFF) after authorities agreed to generate Rs436 billion in more taxes and increase petroleum levy gradually up to Rs50 per liter, with the first tranche of Rs10 per liter from July.
The board agreement between Pakistan and IMF
The federal minister for finance, Miftah Ismail, confirmed the news, he said; “Pakistan and the IMF locked the budget details and achieved substantial progress on finalizing budgetary targets for 2022-23.” He further added; “Now the Memorandum for Economic and Financial Policies (MEFP) will be shared by the IMF soon.” It is pertinent to mention here that Pakistan unveiled a 9.5 trillion rupee ($47 billion) budget for 2022-23, however, the global lender demanded additional measures to bring Pakistan’s budget in line with the key objectives of the IMF program.
The broad agreement and a staff-level agreement will be subject to the IMF board approval, which requires the government to present a revised budget in the parliament and get it approved, including the Finance Bill 2022. It is essential to pass the budget before the end of the month to make it operational from 1st July. As per sources, the United States government has played a huge role in convincing the IMF to change its attitude towards Pakistan.
According to the sources of local media outlet, Geo Tv, these are the proposed changes in the federal budget:
|Budget outlay increased||Rs9,502 billion||Rs9,900 billion|
|Change in FBR’s collection base in FY22||Rs7,004 billion||Rs7,442 billion|
|Poverty tax to be imposed in slabs||>Rs300 million, 2% tax||>Rs150 million, 1% tax
>Rs200 million, 2% tax
>Rs250 million, 3% tax
>Rs300 million, 4% tax
|Pension target revised||Rs530 billion||Rs609 billion|
|Civilian govt expenditures revised||Rs550 billion||Rs600 billion|
|Gas Infrastructure Development Cess collection target reverted due to litigation||Rs200 billion||No target set|
|Custom duty collection target revised||Rs953 billion||Rs1,005 billion|
|Increase in personal income tax target||Rs47 billion relief||Not available|
|Annual tax exemption limit revised||Rs1.2 million||Rs600,000|
Rupee recovers as Pakistan reach the agreement
The Pakistani rupee finally recovered against the US dollar on Wednesday, as the government reached a board agreement with the IMF. According to currency traders, the rupee has recovered 98 paisas against the US dollar and is presently trading at Rs210.50. Previously, the dollar concluded at Rs211.48 as trade ended on Tuesday.