WASHINGTON: International Monetary Fund (IMF) has asked Pakistan to fetch an additional 1% of GDP revenues equivalent to Rs800 billion, while the schedule for talks between Pakistan and the IMF has been readjusted.
As per details, the IMF reportedly asked Pakistan to fetch an additional 1% of GDP revenues equivalent to Rs800 billion, keeping in view the shortfall on both tax and non-tax revenues as well as the hike in expenditure side.
The debt servicing has ballooned to unprecedented levels, putting more pressure on fiscal fronts.
The budget deficit is projected to touch Rs4.750 trillion or close to 6% of GDP against the envisaged target of Rs3.79 trillion. The primary deficit is now assessed that it may touch a deficit of 2.8% of GDP, equivalent to Rs2.18 trillion against the sought target of a surplus of Rs152 billion or 0.2% of GDP.
Since inflation is anticipated to be between 23% and 25% and the GDP growth objective may be reduced to 2% of GDP, the macroeconomic framework will be altered lower.
Due to import compression, the FBR’s shortfall is expected to be between 400 and 500 billion rupees.
The largest revenue shortfall would be noticed as a result of reaching a Petroleum Development Levy (PDL) of Rs855 billion, therefore the non-tax revenue target will also be missed.
The government’s greatest revenue potential, according to the IMF, is estimated at Rs500 billion, therefore the anticipated shortfall will be between Rs300 and Rs350 billion. The government has stated that since the SBP profit was increased from Rs300 billion to Rs371 billion, they might take some action.
Separately, talks, as per Dawn, were rescheduled after last month’s release of a World Bank report on flood damages in Pakistan.
It should be noted that some media reports claimed that the talks, scheduled to be held last week, had been postponed till the third week of November.
According to report the negotiations will get back up once Pakistan carries out its promise to modify the sales tax on petroleum items and takes other actions necessary under a loan agreement revived earlier this year.
The damage, loss and needs assessment calls for “building back better”, based on the principles of the poor first, transparency, inclusion and climate resilience. The assessment estimates total damages to exceed $14.9 billion, and total economic losses to reach about $15.2bn.
