Pakistan is set to initiate crucial discussions with the International Monetary Fund (IMF) concerning the completion of the second review under the $3 billion Standby Arrangement (SBA) program, as reported by The News on Wednesday.
A formal invitation will be extended to the Washington-based lender shortly after the formation and swearing-in of the federal cabinet, with talks anticipated to commence next week.
Simultaneously, Pakistan plans to request a fresh deal under the 36-month Extended Fund Facility (EFF). While the size of the next EFF program remains undetermined, there’s consideration to enhance it with climate finance, potentially increasing the program’s size from $6 billion to $8 billion, sources revealed to the publication.
The primary challenge for the incoming finance minister will be to vigorously pursue the Federal Board of Revenue’s (FBR) tax collection target of Rs890 billion for March 2024, meeting the agreed quarterly target with the IMF.
Should a shortfall occur in March 2024, the IMF may propose additional taxation measures for the remainder of the fiscal year, according to an official statement.
In light of these challenges, Prime Minister Shehbaz Sharif chaired a high-level meeting at the PM Office to receive a comprehensive briefing from the FBR team on future strategies for overhauling the taxation system.
Despite the FBR’s collection of Rs5.82 trillion in the first eight months of the current fiscal year, a revenue shortfall of Rs33 billion was observed in achieving the February 2024 monthly target.
To achieve the desired target of Rs9.415 trillion by June 30, 2024, the FBR must collect Rs3.58 trillion in the remaining four months (March-June) period. March 2024 specifically requires a monthly target of Rs890 billion to meet the IMF’s agreed third-quarter target (Jan-March).
PM Shehbaz directed for the immediate commencement of automation and digitization of the FBR, stressing his personal oversight of the process and the adoption of best global practices.
He emphasized the need for international firms’ expertise in the automation and digitization process and highlighted the importance of rewarding honest and competent FBR officers.
PM Shehbaz stressed the necessity of effective collaboration between the Ministry of Interior and the Pakistan Army to curb smuggling, emphasizing the importance of learning from past experiences to move forward effectively.
He commended the efforts of caretaker finance minister Dr. Shamshad Akhtar and her team for adhering to the policies of his previous government, preventing default.
The FBR chairman informed PM Shehbaz about ongoing efforts to expand the tax net, with plans to integrate 1.5 million more individuals. The prime minister instructed the immediate implementation of digital invoicing legislation.
The meeting was attended by various officials, including Attaullah Tarar, Dr. Musaddik Malik, Rumina Khurshid Alam, Rana Mashood Ahmad, Ahad Cheema, Dr. Jahanzeb, Dr. Shamshad Akhtar, the FBR chairman, and the State Bank of Pakistan governor.
