ISLAMABAD: As International Monetary Fund (IMF) demanding withdrawal of power subsidy to the export-oriented sector and additional taxes on power sector, technical level talks between Pakistan and the fund team have been extended for two more days.
The technical level talks with the Fund continued on Sunday and will continue today on power sector, according to Business Recorder. The Fund is reportedly demanding additional tax measures including increase of one percent in the standard rate of sales tax to bridge the revenue shortfall. However, any decision would depend on the revenue gap to be determined during the policy level talks.
The IMF has been pushing for the removal of the Rs100 billion in power subsidies given to the export-oriented sector and wants to fully close the Rs952 billion power sector shortfall through an increase in electricity rates. The government side has attempted to convince the IMF delegation that it would be challenging to pay the entire sum, nevertheless. According to sources, Rs50 billion in power subsidies have been given to the export sector. A significant obstacle during the technical-level discussions was the power industry.
Moreover, Pakistan and the IMF officials have differences over the figures of budget deficit and the tax data. The government officials have failed to convince the IMF over their point of view, sources said.
IMF officials said that the tax revenue of Pakistan will likely remain 840 billion rupees down, while the Pakistani delegation keeps the figure down by 450 billion rupees.
