Important developments for staff-level agreement between Pakistan and IMF

Important developments for staff-level agreement between Pakistan and IMF
Read Counter 1

Important developments for staff-level agreement between Pakistan and IMF

Islamabad: Negotiations between the IMF Review Mission and Pakistan have made significant progress towards reaching a staff-level agreement on a comprehensive economic policy and reform programme.

Negotiations on the new program between Pakistan and the IMF review mission have been completed. The IMF has recommended the government to increase electricity and gas tariffs and impose 18% GST on petroleum.

According to the ongoing announcement of the IMF, the team headed by IMF Review Mission Chief Nathan Porter visited Islamabad from May 13 to May 23, 2024. The IMF team discussed the domestic projects for Pakistan’s Home Ground Program on Development with the support of the EFF programme.

The reform program introduced by Pakistan aims to move Pakistan from economic stability to strong, inclusive and resilient development. To achieve this goal, the authorities plan to continue to strengthen public finances to reduce vulnerabilities by improving domestic revenues through better taxation.

Pakistan has agreed to increase spending on human capital, social security and climate resilience, and plans reforms to secure energy sector viability and reduce high energy costs. Continue progress towards low and stable inflation through appropriate monetary and exchange rate policies.

read more: IMF proposes increase in electricity and gas tariffs, 18% GST on petroleum

Improving public service delivery through restructuring and privatization of state-owned enterprises and promoting private sector growth by securing a level playing field for investment and stronger governance.

The mission and officials will continue to discuss the policy in practice in the coming days with the aim of finalizing the talks.

It should be noted that before the staff level agreement, Pakistan had to follow several pre-conditions while the budget of the new financial year also has to be presented as per the conditions of the IMF.

The government has started considering a carbon levy instead of GST on petroleum next year, while the implementation of new taxes, increase in electricity and gas tariffs and reforms in the energy sector are among the conditions.

The government is already collecting 60 rupees per liter petroleum levy on petroleum products, it is estimated to get 1 thousand 80 billion rupees from petroleum levy in the next fiscal year, while in the next two years, 2295 billion rupees are expected to be generated from petroleum levy. . This will increase the revenue from petroleum levy to Rs 1,215 billion next year.

Important developments for staff-level agreement between Pakistan and IMF