Finance Minister Muhammad Aurangzeb on Thursday said that the talks with the International Monetary Fund (IMF) are moving in the right direction and expressed hope that a staff-level agreement will be reached in July.
The budget, which analysts believe has been tailored to meet IMF requirements for securing another bailout of $6 to $8 billion under the medium-term Extended Fund Facility (EFF), marks a 25% increase over the outgoing fiscal year’s outlay.
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“The discussion with IMF is moving in the right track […] we are hopeful and we aim to reach a staff-level agreement in July,” the finance minister told reporters during the post-budget press conference.
The minister said virtual discussions were underway with the Fund’s team and they’re exchanging views on the budget as well. “I don’t want to say anything in finality other than the fact that it’s moving positively.”
The government has set a challenging tax revenue target of Rs13 trillion for the next fiscal year starting July 1, a near 40% jump from the current year, in the national budget that looked to strengthen the case for a new bailout deal with the IMF.
As the authorities find ways to increase revenues to reduce fiscal deficit as part of reforms being discussed with the IMF, they have raised taxes that will fetch additional revenues of Rs3.8 trillion in line with the IMF demands.
The government has jacked up taxes on salaried, non-salaried class, real estate, retailers, vehicles, removed GST exemptions and slapped taxes on milk and milk products, mobile phones, and tier-1 retailers of branded stores at 18%.
On a question of reservations by the Pakistan Peoples’ Party on the Rs18.7 trillion budget, the federal minister said that all the allied parties were given a briefing on the budget proposal and were taken on board.
