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Govt to impose Rs215bn additional taxes to seal IMF deal

The government will raise a further Rs215 billion in new taxes and reduce spending by Rs85 billion, said Dar.

Islamabad, 25 June, 2023 (GNP): Finance Minister Ishaq Dar informed the National Assembly on Saturday that the government has agreed to implement Rs215 billion in new taxes. This move came as a final attempt to revive the stagnant International Monetary Fund (IMF) loan programme.

The decision followed a meeting between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva in Paris, which took place during the Global Financing Summit.

Also Read: Govt is willing to make adjustments with IMF

While addressing the lower house of the parliament session, Dar said, “Pakistan and the IMF had detailed talks as a last effort to complete the pending review.”

During the negotiation, the government agreed to make several modifications to its budget for the fiscal year 2024.

Dar said that the government will raise a further Rs215 billion in new taxes and reduce spending by Rs85 billion. He also said that starting next month, the government will take a number of measures to reduce the budget for the fiscal year.

Moreover, the federal minister said, “Pakistan has agreed on Rs215 billion taxes after three-day parleys with the officials of the IMF to complete the 9th review under the EFF, pending due to the country’s external financing gap.”

“As a result of the talks with the IMF, for the fiscal year 2023-24, the final taxes of only Rs215 have been agreed, ensuring that it will not burden the poor and middle segments of the society,” he added.

He further said, “Pakistan would bring down the running expenditure by Rs 85 billion, which would have no impact on the proposed development budget, the raise in salaries and pensions of the federal government employees.”

Also Read: PM Shehbaz attended New Global Financing Pact summit in Paris

Furthermore, Dar said that the government has raised the proposed tax collection target of the Federal Board of Revenue (FBR) from Rs 9.2 trillion to Rs 9.415 trillion. The provincial share has also increased from Rs5.276 trillion to Rs5.390 trillion.

The government has made adjustments to the federal government’s total expenditure estimate, raising it from Rs14.460 trillion to Rs14.480 trillion. Moreover, the pension estimate has also increased from Rs761 billion to Rs801 billion.

Additionally, the government has set the subsidy estimate at Rs1.064 trillion and grants at Rs1.405 trillion.

These measures collectively aim to reduce the overall budget deficit, with a cushion of Rs300 billion, which includes raise of Rs215 billion in new taxes and reduction of Rs85 billion in running expenditures.