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IMF Commends Pakistan’s Budget 2024-25, Endorses Key Fiscal Reforms

Islamabad: The International Monetary Fund (IMF) has expressed satisfaction with Pakistan’s budget for the fiscal year 2024-25, lauding the government’s steps to align with global fiscal standards and implement comprehensive tax reforms.

Sources revealed that the IMF had advocated for the elimination of extensive tax exemptions, amounting to over Rs. 3 trillion, a recommendation that the Pakistani government has incorporated into the new budget. The Federal Board of Revenue (FBR) is set to enhance its enforcement measures to broaden the tax base, targeting tax revenues exceeding Rs3.8 trillion for the upcoming fiscal year.

The alignment of income tax on the salaried class with international norms and the adoption of technology to curb tax evasion are among the measures that have earned IMF’s approval. Additionally, the government plans to limit energy subsidies and ensure consumers are charged the full cost of production, in line with IMF’s recommendations.

In a move aimed at revitalizing the power sector, state-owned electricity companies are slated for privatization, and the sector will undergo deregulation. This step is expected to enhance the performance of government companies to meet the standards of similar entities in friendly Arab countries.

According to reports, political parties have agreed not to politicize the IMF programme, ensuring that provincial governments will fully implement the new fiscal measures. This bipartisan approach is crucial as the country seeks to enhance its revenues and reduce its fiscal deficit, part of the broader reforms discussed with the IMF. Pakistan will now negotiate for a loan of $6 billion to $8 billion from the IMF to avert an economic default.

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