Rs 700 billion new taxes on cards due IMF pressure

Rs 700 billion new taxes on cards due IMF pressure
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ISLAMABAD: The Government of Pakistan and the International Monetary Fund (IMF) will continue their talks regarding a bailout agreement for a second day on Saturday in the federal capital.

Earlier on Friday, Pakistan and IMF held talks in Islamabad, after which the Ministry of Finance said they had made “good progress” in their discussions. “Consultations will continue over the weekend,” it added.

Sources in the Ministry of Finance had earlier informed that Pakistan and IMF were close to finalizing a staff-level agreement expected to range between $6-7 billion.

Under the proposed bailout agreement, Pakistan would have no choice but to concede to the IMF’s demands to hike power tariffs and taxes and withdraw tax concessions and exemptions — which are among the conditions that the country has accepted to secure the loan.

According to the ministry sources, the government would increase the costs of electricity and gas for the consumers in two phases within this year. New taxes amounting to Rs700 billion would be revealed in the budget for the next fiscal year, to be announced on June 11.

Budget deficit would be restricted to 4.5 per cent, whereas the revenue target for the Federal Board of Revenue would be set at around Rs5.3 trillion. Interest rate would be brought up to 12 per cent.

Under the proposed agreement, the government would not control the rate of the dollar, and subsidies in the energy sector, as well as other sectors, would be withdrawn.

Furthermore, the plan to privatize institutions incurring losses would be shared with the IMF .

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