Government seeks IMF waiver on fertiliser and pesticide taxes in upcoming budget
DNA
ISLAMABAD: The visiting International Monetary Fund (IMF) team has indicated its unwillingness to support broad-based relief for the salaried, property, beverage, and export sectors, linking any such measures to a corresponding reduction in government expenditures and the Federal Board of Revenue’s (FBR) tax collection target.
This position has emerged as the central theme of the ongoing discussions, with the IMF delegation set to conclude its visit on Friday (today).
One notable exception to the Fund’s austerity push is the defence budget, which the Pakistani government is expected to increase due to prevailing geopolitical considerations.
On Thursday, Prime Minister Shehbaz Sharif and his economic team met with the IMF delegation, headed by Jihad Azour, the Fund’s Director for the Middle East and Central Asia.
Pakistan has requested the Fund to defer an increase in the FED on fertiliser from 5 to 10% and 5% imposition on pesticides. The IMF may grant its assent to some extent on the prime minister’s request. The increase in salaries and pensions would be minimal, mainly because the much-trumpeted rightsizing exercise had lost its steam.
“We are clueless about how this number crunching for finalising budgetary estimates will be done,” said sources, adding that the government would announce the budget on June 2 following which virtual talks were expected to continue.
Before the Finance Bill 2025 becomes a finance act, all IMF conditions would be aligned and fulfilled to avoid criticism during the budget approval process.
However, a top government official confirmed that the taxation would set the country’s direction for the next couple of years, as they were making last ditch efforts to convince the IMF to allow reduction in the rates of income slabs for the salaried class.
“The FBR’s tax collection target will be fixed at over Rs14.1 trillion in the coming budget depending upon the ability of the Finance Division to reduce its expenditure proportionally.”
Defence budget allocation will only be an exception in the next budget, as it will be hiked keeping in view the country’s needs.
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