Pakistan, IMF clinch accord on budget

ISLAMABAD: Pakistan and the IMF on Tuesday night evolved a broader agreement on the budget 2022-23 for revising upward the FBR target and slashing down the expenditures to achieve revenue surplus in the next fiscal year.

Pakistan and the Fund staff achieved substantial progress for striking a consensus on budget 2022-23 and now the IMF will share draft Memorandum of Economic and Financial Policies (MEFP) on coming Friday or Monday. In the next few days, the IMF and SBP will work out modalities on monetary targets, including further tightening of monetary policy, net international reserves and net domestic assets.

Federal Minister for Finance Miftah Ismail on Tuesday night said that “Pakistan and the IMF locked the budget details and achieved substantial progress on finalising budgetary targets for 2022-23. Now the MEFP will shared by the IMF soon,” the minister said.

According to sources, the government has fulfilled the demands of the IMF and accepted to slap Rs1,200 tax on salary earner of Rs50,000 to Rs100,000. The government made all-out efforts to convince the IMF but failed to do so. The FBR target has been proposed to be increased from Rs7,004 billion to Rs7,442 billion for the next fiscal. The expenditure target was revised downwards, so the revenue surplus of Rs152 billion would be achieved.

The sources said the petroleum levy has also been readjusted as the levy of Rs5 per litre will be imposed. This would be gradually increased up to Rs30 per litre instead of Rs50 per litre. The petroleum levy target has been slashed down from Rs750 billion to Rs550 billion.

Now the IMF will share the draft MEFP on coming Friday or Monday. In next couple of days, the monetary tightening might be done. The SBP will also take other steps to align with the IMF requirements.