IMF recommends harsh measures for bailout package

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IMF recommends harsh measures for bailout package

ISLAMABAD - The IMF has recommended several harsh measures which will enhance the inflation and reduce the purchasing power of the citizens.

The fund has asked the government for a fiscal adjustment to cut on the budget 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, as there is lesser room to cut on the expenditures side. Therefore, the IMF has asked the government to introduce new taxes valuing around Rs. 160 billion. 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 0.4 percent to achieve the target tax revenue as part of a steep fiscal adjustment.

The fund has sought a strategy from the Federal Board of Revenue (FBR) for releasing tax funds before the end of policy talks. The IMF has also suggested improving revenue collection at the import stage amid 26 percent rupee depreciation this year and further devaluation under the program.