• Hike in petroleum levy, imposition of GST on petroleum products not expected anytime soon
• Govt sees economic activity picking up next month due to stable rupee, lower policy rate
• Senate body points to issues in Islamic banking, fraudulent POS receipts, fake ATM notes
• 10pc levy on transport with Iran has left over 600 trucks stalled

ISLAMABAD: The Inter­national Monetary Fund (IMF) is reported to have expressed satisfaction over the increase in the tax-to-GDP ratio by nearly 1.5 percentage points, relieving the authorities from any push for additional tax measures through a mini-budget.

According to sources closely involved in ongoing discussions with the visiting IMF mission, the Federal Board of Revenue’s (FBR) revenue collection target for the current fiscal year will remain unchanged at Rs12.97 trillion. Authorities have ruled out the need for additional taxes or a mini-budget, citing the IMF’s positive response.

Officials said that economic activity is expected to pick up by December in view of a stable exchange rate and a reduction in the State Bank’s policy rate, likely offsetting a tax shortfall of around Rs190 billion recorded in the first four months (July to October) of the fiscal year.

There would neither be any increase in the petroleum levy nor would general sales tax (GST) be imposed on petroleum products, the sources said after a meeting of the Senate Standing Committee on Finance and Revenue presided over by PPP Senator Salim Mandviwalla.

They said the tax-to-GDP ratio had increased from 8.8pc to 10.3pc and the IMF was satisfied with this 1.5 percentage point improvement.

The sources reiterated the commitment given to the IMF that tax collection on agriculture income would start from the next fiscal year. They said that tax reforms were progressing and the draft Tax Laws Amendment Ordinance 2024 had been presented to the prime minister for approval. The ordinance contains a new family income tax return system and abolishes the concepts of non-filers and late filers.

The sources, however, hinted at tinkering with the Tajir Dost Scheme to effectively bring in traders into the tax net and said these were being discussed with the IMF mission during the ongoing meetings.

The IMF has been told that the FBR collected Rs12bn from retailers during the first quarter of 2024-25, although only 500,000 potential retailers were the target out of three million small shopkeepers.

‘Slow progress on Islamic banking’

Earlier, the Senate panel decided to call scholars of the Council of Islamic Ideology to have input on the working of Islamic banking operations in Pakistan, for which a special session would be arranged.

The central bank’s deputy governor told the panel that Riba was the main difference between conventional banking and Islamic banking.

Senator Farooq H. Naek pointed out that full implementation of Islamic banking was committed for 2027, but progress had been very slow. The SBP’s deputy governor emphasised the need for continued deliberation on Islamic banking and assured the committee that several banks were actively working towards compliance.

FBR Chairman Rashid Mehmood Langrial told the panel that FBR’s enforcement would be improved in the coming months after approval of a transformation plan, including enhancing the board’s operational expertise, organisational capacities and anti-smuggling measures.

Key discussions during the meeting included the contentious 10pc levy on transport and businesses between Pakistan and Iran, raised by Senator Manzoor Ahmad Kakar in a Senate session. The committee resolved to report to the house that the issue may be referred to the Standing Committee on Communications, noting that the levy, imposed with the federal government’s approval, did not pertain to the Federal Board of Revenue.

While FBR officials emphasised that this specific tax was not their responsibility, Senator Kakar raised concerns that Pakistani trucks were being unfairly taxed, with over 600 trucks currently parked due to the levy. The committee agreed to forward the matter to the Communications Committee for further deliberation.

The committee also discussed concerns raised by Senator Mohsin Aziz regarding the fee collected by FBR for point of sale (POS) services and its utilisation. The FBR chairman confirmed the introduction of a policy to penalise businesses that are issuing fake POS receipts, imposing fines of Rs500,000 and shutting down shops involved in such practices.

Senator Aziz highlighted weaknesses in enforcement, with some fake receipts circulating in the mar­ket, including a bill in Islamabad marked “tentative”. The FBR chairman acknowledged the issue and assured that enforcement mea­sures would be strengthened soon.

A key briefing by the SBP highlighted the performance of banking branches in smaller provinces, revealing that as of June 30, 2024, there were 3,334 banking branches operating in Balochistan, Khyber Pakhtunkhwa, Azad Jammu and Kashmir and Gilgit-Baltistan, accounting for 20pc of the total nationwide branches. Additionally, 199 branches of microfinance banks were serving these regions, representing 13pc of the country’s total microfinance network.

Another pressing issue discussed was the problem of counterfeit currency dispensed from ATMs. Senator Kakar cited a case where a young man received fake Rs5,000 notes from an ATM. The CEO of a commercial bank assured the committee that security measures were being enhanced to address this issue.

Published in Dawn, November 14th, 2024

Govt withdraws Balochistan EPZ proposal, approves funds for SCO summit

IMF spokesperson says successful implementation of 9-month standby arrangement had stabilised Pakistan’s economy

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TORONTO, ON — With the upcoming October 27 municipal elections taking place, political change is coming to many of Ontario’s big cities. A new paper by the University of Toronto’s Institute on Municipal Finance and Governance (IMFG) at the Munk School of Global Affairs profiles election campaigns in six of Ontario’s biggest cities — Hamilton, […]

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[Vanguard] The International Monetary Fund (IMF) has asked the Nigerian government to put in place a more efficient tax collection system in order to broaden its revenue base.

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At the 2021 UN Climate Summit, Barbados prime minister Mia Mottley called for more and better use of special drawing rights (SDRs), the International Monetary Fund’s reserve asset. The special drawing right is an international reserve asset created by the IMF. It is not a currency—its value is based on a basket of five currencies, […]

Over the coming month, the United States has a window of opportunity to lift a multi-billion-dollar burden from Ukraine, and other countries in financial distress, without costing the US taxpayer a dime. The International Monetary Fund (IMF) is currently considering ending its controversial “surcharges” — punitive fees that it imposes on countries whose debt exceeds […]

This month, the International Monetary Fund (IMF) had an opportunity to end one of its most reviled policies and lift billions of dollars of debt off the backs of crisis-stricken developing countries. It chose not to. The IMF’s ostensible mission is to promote financial stability by providing loans to countries facing economic challenges or crises. […]

• Holds introductory meeting with finance minister
• Govt pledges to end gas supply to captive power plants by Jan
• Lender’s team to hold joint session with power and petroleum divisions today

ISLAMABAD: The International Monetary Fund (IMF) has sought a detailed, output-based update on Pakistan’s digitalisation plans for its revenue system, including the use of artificial intelligence to expand the tax base and increase collections.

On the energy side, the country has pledged to halt gas supply to captive power plants (CPPs) by January 2025, redirecting them to the national grid despite a strong pushback from influential rent-seeking industrialists. The IMF has firmly rejected any amendments to this programme benchmark.

The visiting IMF team, led by Pakistan’s mission chief Nathan Porter, held an introductory meeting on Tuesday with Finance Minister Muhammad Aurangzeb. Minister of State for Revenue Ali Pervez Malik, State Bank Governor Jameel Ahmad and Federal Board of Revenue (FBR) Chairman Rashid Mehmood Langrial were also present.

The mission is also holding separate technical sessions with all the stakeholders, including the FBR, power and petroleum divisions and the energy sector regulatory authorities. In all these engagements, the mission appeared to have not expressed its mind so far, except from raising exploratory questions, participants told Dawn.

It is not yet clear if the dialogue would lead to policy-level discussions that had been a critical part of IMF programmes’ quarterly reviews.

The current $7 billion Extended Fund Facility (EFF), however, has been designed in a manner that the IMF and Pakistan authorities should hold biannual review meetings for the disbursement of about $1bn instalments during each cycle.

The first formal review has to take place based on the end-December performance for Pakistan to qualify for disbursement for a second instalment of over $1bn by March 15, 2025.

Officials said the IMF mission has called for detailed explanations on the digitalisation of FBR’s processes for revenue collection, application of artificial intelligence for identifying and tracing tax evaders and their taxable incomes and businesses and involvement of specialised expert firms. They have also sought a complete update on the track-and-trace system.

In initial meetings, the FBR attributed recent revenue shortfalls — particularly in the first month of the second quarter — to the declining inflation.

The power sector’s performance appears to be within agreed limits concerning circular debt and current revenues.

Circular debt rose by about Rs70bn, below earlier estimates of Rs240-250bn. A circular debt management plan was approved only last week by the Economic Coordination Committee (ECC), led by the finance minister.

Sources said the government had been going back and forth over the disconnection of gas supply to inefficient captive power plants, belonging mostly to the textile sector, to utilise surplus capacity in the national power grid.

The industrialists have, however, now mustered support from gas companies. Some stakeholders are now pushing for the supply of imported LNG to CPPs at a weighted average cost of local and imported molecules on the premise that electricity connections were not available or were insufficient in certain areas.

The IMF mission is scheduled to have a joint session with the power and petroleum divisions on Wednesday (today) to discuss their interrelated issues, including circular debt, planned tariff adjustments, loss reduction programmes and recoveries.

Published in Dawn, November 13th, 2024

ISLAMABAD — The International Monetary Fund's Pakistan mission chief Nathan Porter on Tuesday (Nov 12) opened unusual talks with Pakistan over a US$7 billion (S$9.4 billion) bailout approved by its board in September, the finance ministry and sources said. The unscheduled visit of the IMF mission and talks beginning with meeting the country's finance team are too early for first review of the IMF's Extended Fund Facility (EFF), which is due in the first quarter of 2025. The chiefs of Pakistan's central bank and federal board of revenue also attended the meeting besides other officials from both the sides, the statement said. The ministry and the IMF have not officially released details of the visit. Sources in the finance ministry said the Nov 11-15 visit will discuss recent developments and programme performance to date, adding the mission was not part of the first review. The sources declined to be identified as they were not authorised to speak with the media. Pakistan has been struggling with boom-and-bust economic cycles for decades, leading to 23 IMF bailouts since 1958.

Why was the Extended Fund Facility (EFF) signed between the two? Why is IMF important for Pakistan’s economy?

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The IMF's meeting in Singapore next week is expected to endorse a decision to enhance voting powers for four middle-income countries: China, South Korea, Mexico, and Turkey. For a 184-member body still controlled by seven developed countries, this won't pass for democratisation, says George Monbiot.

नयी दिल्ली। अंतर्राष्ट्रीय मुद्रा कोष (आईएमएफ) ने चेतावनी देते हुए कहा है कि कोरोनावायरस के कारण वैश्विक अर्थव्यवस्था में और गिरावट आएगी। आईएमएफ प्रमुख क्रिस्टालिना जॉर्जीवा ने वैश्विक इकोनॉमी पूर्वानुमानों में गिरावट का संकेत दिया है। साथ ही उन्होंने अमेरिका और

The managing director of the International Monetary Fund talks with HBR editor in chief Adi Ignatius.

Key facts, figures and dates

The International Monetary Fund has approved a $226 million loan to help Cameroon to combat the coronavirus as it faced plunging oil revenues.

27 April 2020

27 April 2020

27 April 2020

Government, having said bye, bye to the International Monetary Fund (IMF), declared quite boldly that it was ready to take charge and defend, on its own, the country’s economic independence. For the Government to swallow its pride and say, “Please...

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Berlin : T.C.F. Enslin, 1830.

Stuttgart : F. Enke, 1895.

Statement by Ms Christine Lagarde, President of the European Central Bank, at the forty-first meeting of the International Monetary and Financial Committee, IMF Virtual meetings, Washington DC, 16 April 2020.

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Franciscka Lucien is Executive Director of the Institute for Justice & Democracy in Haiti. Joel Curtain is the Director of Advocacy at Partners in Health.

The post Time for the World Bank and IMF to Be the Solution, Not the Problem appeared first on Inter Press Service.

WASHINGTON: Some debts were not sustainable and needed to be restructured, re-profiled or written off, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said in an interview recorded earlier this week.

In this interview to ITV News, Ms Georgieva also urged governments to spend more money on health workers to protect the most vulnerable.

“There is a possibility that in some cases debt simply is not sustainable and therefore some action has to be taken either to re-profile or restructure or in some cases write off this debt,” she said.

Although G20 countries have promised some debt relief, a transcript of the interview, released by the IMF headquarters in Washington, indicated that Ms Georgieva believed the crisis required them to go further.

Imran has argued that heavy debt burdens are preventing countries from focusing on the challenge of saving people from pandemic as well as hunger

Last month, Prime Minister Imran Khan appealed to the leaders of rich countries, the UN secretary general and heads of financial institutions to give debt relief to developing countries like Pakistan so that they could combat the deadly Covid-19 in a better way.

The prime minister argued that heavy debt burdens were preventing some countries from focusing on the real challenge of saving their people from the deadly pandemic and hunger that extended lockdowns would trigger.

The IMF chief, while acknowledging the need to restructuring loans, also said the first priority was to combat the disease that has already killed hundreds of thousands and infected several millions across the globe.

“The only thing we ask countries is please spend more money for your doctors and nurses — and please, please use the money to protect the most vulnerable,” she said.

The interviewer, Julie Etchingham, noted that loans usually came with conditions — such as tightening public spending — that were difficult to implement during the Covid-19 crisis.

Ms Georgieva said she was aware of the risks ahead for the IMF. “We are looking to the transparency and accountability in countries. They themselves are coming up with commitments to audit the use of the funds we provide, but there are no strings attached,” she said.

The IMF chief said that more than 100 countries had reached out to them for help to fight the pandemic and 50+ requests were swiftly approved for a total of about $18 billion.

Asked to assess the scale of the crisis facing the global economy, Ms Georgieva did not mince her words. “It is the worst crisis since the Great Depression. But it is more than that because it is a combination of a health crisis and an economic shock,” she said. “And it is truly global.”

The IMF now has about $1 trillion dollars lending capacity — four times more than in the last financial crisis.

The IMF approved $1.386 billion of assistance for Pakistan under the Rapid Financing Instrument to address the economic impact of the Covid-19 shock.

Published in Dawn, May 9th, 2020

NEW DELHI: Is India’s real estate bubble finally bursting? The International Monetary Fund’s recently-launched data series on global housing prices hints at that. Among 52 major markets for which IMF has collated house price data, India has witnessed the steepest fall. IMF’s calculation on the annual percentage change in property prices shows that prices in India fell by 9.1 per cent, the highest among major real estate markets. The fall is even worse than in countries struggling with the ongoing European Union’s financial crisis. Property prices in Greece, Italy, Cyprus, Spain and Portugal have all come down, but at a much slower rate. Ireland, on the other hand, registered a […]

The head of the International Monetary Fund on Friday signaled a possible downward revision of global economic forecasts, and warned the United States and China against rekindling a trade war that could weaken a recovery from the coronavirus pandemic.