The economic review talks between Pakistan and the International Monetary Fund (IMF) are progressing, with technical-level discussions concluded for the release of the next $1 billion tranche. Policy-level talks are set to begin on Monday, with Finance Minister Muhammad Aurangzeb leading the discussions.
According to sources, the IMF delegation has held multiple meetings with provincial representatives, tax officials, and NAB officials to discuss Pakistan’s economic performance, tax reforms, and governance measures.
Provincial consultations
- The IMF delegation met with Khyber Pakhtunkhwa’s finance secretary and was briefed on the province's economic performance.
- Discussions included legislation on agricultural income tax and proposals to implement income tax on agriculture at par with the corporate sector.
- Measures to boost provincial revenues over the next six months were also presented.
- IMF and Pakistani officials also deliberated on improving governance and the efficiency of government institutions.
Taxation, revenue reforms
- The chairman of the Federal Board of Revenue (FBR) briefed the IMF team on efforts to digitize tax collection and integrate data to curb tax evasion.
- New anti-tax evasion laws were discussed, with the IMF set to provide input on tax reforms in the next phase of talks.
- Pakistan is considering reducing the tax burden on salaried individuals in the upcoming budget while planning to collect Rs250 billion from various sectors, including retail.
- The IMF has rejected a proposal to abolish GST on electricity bills and has pushed for the implementation of gas tariffs on captive power plants.
Debt, relief packages
- To address circular debt, Pakistan has reached an agreement to borrow Rs1,250 billion from commercial banks at an interest rate of 10.8%.
- The IMF has refused to extend the winter relief package for industrial and agricultural sectors for the full fiscal year.
NAB, governance reforms
- The IMF delegation also met with NAB officials to discuss ways to enhance accountability measures at both federal and provincial levels.
Governance, anti-corruption, transparency
The IMF has stressed the need to strengthen NAB and provincial anti-corruption institutions to improve transparency and accountability.
Discussions were held on addressing politically motivated investigations and ensuring a fair and effective accountability system. The government assured the IMF that steps will be taken to ensure the accountability of public officials and curb illicit wealth accumulation.
The assets of senior government officials (grades 17-22) and their families will be made public by September as part of transparency measures. The State Bank, commercial banks, FBR, and Financial Monitoring Unit (FMU) will collaborate to ensure financial transparency.
A digital portal for asset declaration will be launched by September, managed by the FBR. The IMF is set to release a Governance and Corruption Diagnostic Assessment Report in July, highlighting recommendations for reducing corruption, eliminating bureaucratic red tape, and improving the business environment.
With policy-level discussions set to begin Monday, Pakistan aims to secure IMF support for economic stability, tax reforms, and governance improvements.
