No More Tax Amnesties, Government Commits to IMF
No More Tax Amnesties, Government Commits to IMF
Resumption of Extended Fund Facility accompanies undertaking for massive increase to taxes, utility prices
Pakistan has committed to not provide any new tax exemption or amnesty as part of terms agreed upon with the International Monetary Fund (IMF) to resume the Extended Fund Facility (EFF) that was stalled last year.
A Staff Report made public by the IMF on the second, third, fourth, and fifth reviews of the EFF that concluded last month reveals that the government has set ambitious targets for revenue generation, including by imposing the maximum possible levy on petroleum products (Rs. 30/liter) through the next year. According to the IMF, this would generate Rs. 510 billion in revenues against a budgeted target of Rs. 450 billion. For the next fiscal, this target has been raised to Rs. 607 billion.
Pakistan’s resurging trade deficit isn’t surprising given the nation’s heavy reliance on imports and the limited range of products it can sell to the world. This was expected to increase in the wake of new growth in import demand with the pick-up in economic activities and consumption. Few believed that the government and central bank could reduce the trade gap by holding down the import demand for a very long time to keep the pressure off the country’s current account.
The new trade data published by the Pakistan Bureau of Statistics (PBS) shows that the February trade gap expanded by almost 24 per cent to $2.5 billion year-on-year, mainly owing to the rebounding imports and the falling exports, which luckily continued to grow by above $2bn for the fifth consecutive month. The gap, however, declined by about 5.9pc from January on a month-on-month basis.
Business
February 9, 2021
ISLAMABAD: The government has decided to pay outstanding amount of Rs403 billion to 46 independent power producers (IPPs) and Rs161 billion will be released instantly, sources said on Monday.
The sources said the payment of Rs403 billion will be made in two instalments. First instalment will be 40 percent of the payable and will be paid one-third each in five-year sukuk and 10-year Pakistan Investment Bonds, while remaining 60 percent will be cleared within six months of the first instalment via the similar means.
Release of the payments will help ease pressure on companies and reduce circular debt. The Economic Coordination Committee (ECC) of the cabinet took the decision during a meeting chaired by Minister for Finance and Revenue Hafeez Shaikh.
The roll-out of coronavirus vaccines in many countries will not provide herd immunity from the global pandemic this year, several health experts said on Monday, citing limited access for poor countries, community trust problems and potential virus mutations.