Amid kick-starting of parleys for clinching a fresh bailout package of $6-8 billion for Pakistan’s struggling economy, the International Monetary Fund (IMF) has come up with a tax gap analysis and estimated that the policy and compliance gap stood at 6.9% of GDP, equivalent to Rs7,000 billion on annual basis.
Pakistan and the IMF’s visiting mission entered into talks here on Monday, whereby Mission Chief Nathan Porter-led delegation held a meeting with Minister for Finance Mohammad Aurangzeb. The IMF mission chief pointed out political stability and its importance for pursuing the path of structural economic reforms to achieve growth on a sustained and durable basis under the expected bailout package of $6-8 billion from Extended Fund Facility (EFF).
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Pakistan also took up the issue of augmenting the amount of EFF through climate finance in order to jack up the total size of the package to around $8 billion. A press release, issued here on Monday, said the IMF mission, led by Nathan Porter, called on the Pakistan finance minister on Monday at the Finance Ministry to kick-start discussions on further engagement with the Fund. The meeting was attended by State Bank of Pakistan governor, Federal Board of Revenue chairman, and senior officers of the finance ministry.
The finance minister thanked the mission for successful completion of the Standby Arrangement (SBA). He apprised the IMF team of the improvement in the macro-economic indicators over the course of the SBA and underscored the government’s commitment to continue with and expand upon the reform agenda.
According to official sources, on the tax analysis gap, the IMF and the FBR high-ups held meeting to discuss tax proposals in a threadbare manner. The IMF presented a tax gap analysis, where there are estimates that it stands at whopping level of 6.9% of GDP, translating into Rs7,000 billion on annual basis.
