ISLAMABAD – The IMF has recommended several harsh measures which willenhance the inflation and reduce the purchasing power of the citizens.
The fund has asked the government for a fiscal adjustment to cut on thebudget deficit at around 3.5 percent of the GDP when its package ends.
The only way to bring about this adjustment is by increasing taxes, asthere is lesser room to cut on the expenditures side. Therefore, the IMFhas asked the government to introduce new taxes valuing around Rs. 160billion. It has recommended increasing the standard general sales tax (GST)to 18 percent.
Moreover, the fund has reportedly prescribed the tax-to-GDP ratio of 0.4percent to achieve the target tax revenue as part of a steep fiscaladjustment.
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The fund has sought a strategy from the Federal Board of Revenue (FBR) forreleasing tax funds before the end of policy talks. The IMF has alsosuggested improving revenue collection at the import stage amid 26 percentrupee depreciation this year and further devaluation under the program.
