Islamabad:
The International Monetary Fund (IMF) pressed Pakistan on Thursday for the delay in resolving more than RS170 billion in pending judicial cases before the Constitutional Bank, while questioning the authorities for the tax collection objectives last year.
According to officials, litigation in fiscal cases, often derived from vague legal provisions, retrospective measures or disputes on tax demands, continues to undermine the capacity of the Federal Income Board (FBR) to meet its objectives, many of which are based on early recoveries of these pending cases.
The first day of conversations to end the measures for the approval of the second review of the program and the release of a section of loans of $ 1 billion, the IMF team was informed about fiscal developments, lost fiscal objectives and prolonged litigation. The sources said the main background approach remained the reasons behind the deficit, which had been agreed together with Pakistan.
He also marked the final mission of Julieth Pico Mejia, the outgoing tax expert of the IMF for Pakistan, who will be replaced by an Eastern European official.
Against the original annual objective of RS12.9 billion, the FBR collected RS11.74 billion, missing both the objective of absolute collection and the increase agreed in the relationship imposed to GDP to 10.5%.
The FBR could not fulfill its objective, but the relationship imposed on GDP increased by 1.4% in the last fiscal year, Bilal Kayani, the Minister of State for Finance, said on Thursday.
The face -to -face meeting with the Minister of Finance, Muhammad Aurengzeb, could not take place on Thursday, which is now scheduled for Monday once the minister returns from Washington. The mission will remain in the city until October 8 to also review the implementation of the 26th Pakistan program, the climate installation of $ 1.4 billion.
The sources said the FBR informed the IMF that the fiscal objective could not be achieved due to the lowest inflation and economic growth than the projected. The inflation rate fell to 4.5%, while economic growth, particularly large -scale manufacturing, also remained well below the necessary rhythm, the IMF was informed.
The IMF was told that the FBR collected RS2.5 additional taxes in taxes in the last fiscal year and the contribution of inflation was around RS766 billion, which was lower than budgeted estimates. Similarly, new taxes generated just over 800 billion rupees compared to RS1.2 billion estimates.
One of the reasons for the lowest generation of income from additional fiscal measures was the slow economic growth and the fall in the real estate sector, the sources said.
The IMF also took the informative session on the delay in solving fiscal cases. The FBR had previously informed to the IMF that the Pakistan Supreme Court would make decisions in cases related to super taxes, particularly in 10 sectors that caused discrimination in the eyes of taxpayers and oil exploration companies for June of this year.
The IMF was reported on Thursday that cases are still pending, although the daily audience began as of this month. It was also reported to the fund that the tax authorities now hope that the Apex court can decide the cases at the beginning next month. In one of the cases, the arguments have been completed from both parties, while in another case the government’s legal team has completed the arguments.
After the Apex court did not make a decision for June of this year, the Government had assured the IMF that the matter was expected to be decided at the end of September.
Now it seems that the decision can be announced next month subject to the end of the arguments. But this will lead to miss the quarterly fiscal objective by a wide margin, since the FBR hoped that, in case of a favorable decision, RS177 billion could obtain at the end of September, the sources said.
Until Thursday, the FBR grouped just under RS2.4 Billions in taxes. It needs other RS700 billion in the remaining five days of the month to an average of RS140 billion per day. Collecting RS140 billion a day is almost impossible due to slow general economic growth and already strong advances in the previous months to meet the objectives.
The IMF was also informed that the number of income tax declaration files to date has increased to 7.7 million in fiscal year 2024 compared to 7 million in the previous fiscal year.
The Ministry of Finance informed the IMF about fiscal results in the last financial year. The Government has fulfilled the objective of the main budget surplus of RS2.4 billion along with the total income collected by the four provinces.
This was the second consecutive year of the primary surplus and the highest in 24 years, exceeding the objective of the IMF. The Ministry of Finance tried to stay in the fiscal patch, but the reverse came from the provincial capitals, which were not under the control of the federal government.
The attorney deficit was also reduced to 5.4% of GDP or RS6.2 billion, which was well below the original 5.9% objective.
Provincial governments had given the understanding to the IMF and the federal government to generate cash surpluses from RS1.2 billion. However, the four provinces collectively generated a cash surplus of RS921 billion, losing the objective of the IMF for 280 billion.
