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Tuesday, President Dr. Arif Alvi rejected the federal government’s request for approval of an ordinance that sought to impose new taxes to produce additional income in accordance with the IMF’s requirements to restart the $6.5 billion bailout package.
Ishaq Dar, the finance minister, contacted the president, according to a formal statement released by the president’s House, and informed him of the developments in negotiations with the IMF and the measures that had been agreed upon.
Alvi expressed appreciation for the efforts made by the administration to reach a deal with the International Monetary Fund and gave his assurance that Pakistan would honor the government’s pledges in this area.
The minister explained that the government planned to enact an ordinance to increase tax income.
The president suggested, however, that it would be more appropriate to consult the parliament on this crucial issue and that a session be summoned right away to ensure that the measure was passed without delay.
As of now, the government has complied with the IMF’s two previous demands that it raises the rates of gas and electricity, among other requirements, in order to reach a staff-level agreement.
Details revealed that in just six months, gas consumers would incur an additional cost of Rs310 billion.
In order to raise an additional Rs237 billion until June, the government had already hiked energy tariffs by Rs3.30 to Rs15.52 per unit. By June 2023, an additional burden of Rs189 billion would be imposed on taxpayers in the form of tax increases.
These three measures taken together would make the populace pay an additional Rs736 billion in just six months; the cost was increased as a result of the government’s tardiness in reviving the IMF programme.
What have Pakistan and the IMF agreed to?
The following are the main items that Pakistani officials claim they have already agreed upon with the IMF: The government would put fiscal measures in place, including taxation, in order to earn Rs170 billion in revenue.
The administration will carry out its current obligations to raise petroleum levies. On March 1 and April 1, diesel taxation will increase twice, each time by 5 rupees per liter.
The Pakistani cabinet will consider and accept the IMF’s planned energy reforms. This would entail Pakistan eliminating all of its circular debt, a type of accumulated governmental debt brought on by subsidies and unpaid payments in the electricity industry.
It was not immediately necessary to completely eliminate circular debt. Pakistan would not add additional circular debt for gas in the interim.
