Islamabad:
The International Monetary Fund can reduce the tax collection objective to less than RS12.5 billion due to the general slowdown of economic activities and a great deficit suffered so far in a movement that will still require meet the remaining objectives of the four months and partially recover part of the deficit.
Any reduction in the objective against the original objective of more than RS12.9 billion will depend on the capacity of the Ministry of Finance to reduce the expenses to protect the general goal of the IMF program to generate RS1.2 billion primary budget surpluses in this fiscal year, according to the government sources that deals with the IMF team.
The IMF also asked the Ministry of Energy to share its projections of the circular debt for the next fiscal year 2025-26. The power division assured the IMF that this year fiscal circular debt will remain below the agreed threshold of RS2.429 billion.
The authorities of the IMF and Pakistani met Wednesday for the third consecutive day to discuss the performance of the energy sector, progress in publications of various social and economic surveys by the Pakistan Statistics Office. The discussions also remained on the budget numbers and external financing requirements.
Government sources said both parties discussed the possibility of reducing the fiscal objective between RS12.3 billion to RS12.5 billion. The tax authorities suggested to reduce the objective in RS579 billion compared to the annual objective of RS12.913 billion, they added.
The sources said the IMF indicated to reduce it by RS435 billion to less than RS12.5 billion, but a formal decision has not been made.
The tax authorities thought that the last four years of tendency suggested that they can achieve the remaining objectives but that they needed adjustments against the total objective.
The FBR informed the IMF that it was comfortable to reach the objective of March taxes. But there may be a deficit against the objectives of April and May, which is expected to recover in June.
The FBR has presented a plan to reduce tax rates for tobacco, drinks and construction sectors to obtain another 90 billion rupees through economic activities and better sales. It is claimed that almost RS300 billion recover through judicial cases.
In the search for a highly fiscal objective of more than RS12.9 billion, the government had slapped RS1.3 billion in additional taxes, mainly carrying the existing people and sectors. However, it has already suffered a deficit of RS606 billion during the period of July of February. The salaried class became the victim and, nevertheless, the objective could not be achieved.
Due to the lower autonomous growth than the tax, the FBR suffered a loss of approximately RS450 billion for February. No more deficit is expected in this account until June, according to FBR officials.
The IMF has established the condition to generate a primary budget surplus equal to 1% of the size of the economy or little more than RS1.2 billion. Any reduction without adjusting expenses can compromise this objective.
The sources said the Ministry of Finance had little fiscal space available to reduce spending, except to make another important adjustment in the public sector development program. There is the possibility that the Ministry of Finance does not publish budget launches of the fourth quarter for foreigners financed.
The Government had originally proposed RS1.4 Billion PSDP, which has already been reduced to RS1.1 billion. But spending during the first half was quite low, leaving large space for more cuts in the development budget.
The Ministry of Finance also expects a saving of RS50 billion against the assigned subsidy this year for the electricity sector.
One of the options to recover some of the weak is to recover the anticipated income tax under section 147 of the Income Tax Ordinance. The authorities believe that around RS130 billion can be recovered making additional efforts.
During the first seven months of this fiscal year, the FBR received RS929 billion taxes on anticipated income under section 147, which was 27% higher than the corresponding period last year.
The FBR informed the IMF that it recovered RS90 billion through application measures during the first eight months of this fiscal year. But this mainly came from banks due to unexpected income tax and increased income tax rate based to 44%.
On Tuesday, Finance Minister Muhammad Aurengzeb, told Express PAkGazette that the government would deplete other ways to make the income deficit instead of taking additional income measures.
The Pakistan statistics office also gave the IMF on the status of publication of several social and economic surveys. These surveys are critical to know the true economic and social health of society, since the government does not have the latest number of poverty, unemployment and the agriculture census.
The PBS informed the IMF that currently, the field operations of the first Integrated Economic Survey (HIES) of Digital Provincial Level (HIES), 2024-25 are in Progreso.
HIES provide a clear image about the literacy rate, outside schoolchildren, registration, child health, particularly the infant mortality rate, women’s health indicators and homes of households, savings, liabilities and patterns of consumption and consumption expenses at national and provincial level with urban and rural rupture.
This survey also provides necessary data for the estimation of consumption -based poverty. Of the total of 62 sustainable development objectives, 31 indicators are being covered in HIES surveys, the IMF was told. The lender was informed that the results of HuC will be published in December of this year.
Pakistan has also launched the 2024-25 workforce survey and field work is currently in progress. The government told the IMF that the quarterly reports of the labor survey will not be published; Instead, an annual report will be published within six months after the completion of field work.
