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ISLAMABAD: The Pakistani authorities have been asked to take more measures besides abolishing the special tax system for the construction sector, in the review negotiations for the next tranche of the IMF loan program. The approval of this loan will require Pakistan to fulfil some of the following conditions.
- The IMF has directed Pakistani authorities to cancel tax exemptions for non-profit organizations and re-evaluate tax incentives for charities.
- The IMF called for the withdrawal of discretionary powers of tax collection agencies and cabinet members. According to the sources, the IMF also asked the federal government to increase cooperation with the provinces for tax collection and implementation of provincial tax laws.
- The IMF also recommended the establishment of a Tax Policy Unit in the Ministry of Finance. It was recommended that a comprehensive system of data transfer between the Federal Board of Revenue (FBR) and other agencies be established immediately.
The IMF team was briefed that a new banking model has been introduced for payments to 9.3 million people under the sponsorship program while the government is taking steps to further improve the tax system.
Pakistan’s Finance Ministry reported Wednesday that it “has met all structural benchmarks, qualitative performance criteria, and indicative targets for successfully completing the IMF review.”
The ministry added that the appraisal was expected to produce a “staff-level agreement,” and the remaining payment would be disbursed after the IMF executive board approved it.
Meanwhile, an International Monetary Fund delegation commenced a review of Pakistan’s current loan program on Thursday amid the country’s urgent need for additional funding to address its economic challenges. This four-day review will determine the release of the final payment under a $3 billion IMF bailout package secured by Islamabad last year to prevent a sovereign debt default.
According to IMF data, Pakistan has borrowed a total of 13.79 billion SDRs from foreign governments to date, with the Pakistan Peoples Party (PPP) accounting for 47%, followed by the Pakistan Muslim League-Nawaz (PML-N) with 35%, and the military dictatorship with only 18%.
Additionally, the State Bank of Pakistan (SBP) recently revealed that Pakistan faces foreign debt repayments totaling $27.47 billion by November 2024, encompassing both principal loans and interest costs.