Govt agrees to cut development budget in talks with IMF

Pakistan on Monday agreed to the visiting International Monetary Fund (IMF) mission’s demand for fiscal adjustments in a bid to unlock funds critically needed for the ailing economy.

Islamabad has agreed to slash development budget and ongoing expenses, while in the energy sector, subsidies will continue for Gilgit-Baltistan and Azad Kashmir, the Kissan package and Balochistan’s tube well scheme.

It is pertinent to note that the IMF mission has been in Islamabad since Jan 31 for fiscal policy talks to resume the release of over $1 billion from the $6.5 billion bailout package signed in 2019 during the Imran Khan government.

The IMF mission will remain in the capital till Feb 9.

SAMAA TV reported that subsidies will continue for Gilgit-Baltistan and Azad Kashmir, Kissan package in energy sector and Balochistan’s tube well scheme.

Both sides finalized that provinces will be free to provide subsidies to the export sector on their own.

No decision on petrol levy

A final decision regarding sales tax or levy on petroleum products has yet to be taken, as the IMF has proposed to increase in GST from 17 to 18 percent.

The international lender asked the Pakistani negotiators to abolish income tax exemption during the current financial year.

FBR reforms

The Federal Board of Revenue officials said bank profits will also be taxed, while sustainable reforms implemented in the bureau.