The talks between Pakistan and the International Monetary Fund (IMF) to secure the final tranche of $1.1 billion under a standby arrangement have reported some significant progress.
The two sides are expected to reach a staff-level agreement early next week. Sources from the Finance Ministry have revealed that Pakistan has also committed to timely increases in electricity and gas tariffs, as well as the abolishment of tax exemptions.
The sources said that the electricity tariff is expected to be further increased from July 1. Additionally, measures will be put in place for monthly, quarterly, and annual adjustments to facilitate cost recovery.
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Furthermore, there is an emphasis on the abolition of tax exemptions, including those pertaining to income tax, sales tax, and duties. Plans are underway to phase out the current annual tax exemption amounting to Rs2.239 trillion, with a further commitment to gradually document the economy to bolster tax revenue.
The government has also pledged not to issue any new tax exemptions or amnesty schemes in the upcoming budget. However, exemptions for foreign diplomatic missions and non-profit charitable organizations will be retained.
The IMF has stressed the importance of protecting beneficiaries under the Benazir Income Support Programme (BISP), with the government committing to increasing the number of beneficiaries by June.
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Furthermore, the IMF has underscored the necessity of continuing reforms to maintain economic stability. This includes maintaining a tight monetary policy and adhering to a market-based exchange rate policy.
Overall, the progress in the economic review talks signifies a concerted effort by Pakistan and the IMF to address key economic challenges and pave the way for sustainable growth and stability in the country's economy.
On the successful completion of the negotiations, Pakistan will get the final installment after the approval of the IMF's Executive Board.
