ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to increase power and gas tariffs as it wants the government to collect Rs150 billion more under the head of personal income tax, Finance Minister Shaukat Tarin told National Assembly Standing Committee on Finance on Thursday.

Tarin said that in the first phase, the IMF proposed an immediate tariff hike of Rs1.39 in electricity prices while in the second phase, the fund proposed a hike of Rs4.95 in the power tariff — a total increase of Rs6.34. The IMF has been demanding an increase in the power tariffs to curtain the circular debt that has reached Rs2,500 billion owing to power losses due to the poor transmission system and theft.

During a meeting of the NA body chaired by ruling PTI’s Faizullah Kamoka, Tarin said that the IMF also wanted the government to increase the gas tariff.

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Tarin told the NA committee that a meeting was held with the Fund officials on Wednesday, during which it was relayed to the international money lender that an increase in power and gas tariff will hurt Pakistan’s industrial growth.

According to Tarin, the IMF executive body will meet in September to approve Pakistan’s case. He added that the meeting was supposed to take place in on July5-7, but now it will be held in September. He further said that till Septemeber, the Fund will monitor Pakistan’s performance and added that both IMF and the government wanted a stable economic outlook. The finance minister said that the government will issue Sukuk and green bonds to boost its dollar reserves.

The finance minister also talked about the Federal Board of Revenue (FBR), saying the tax watchdog is ill-prepared to collect revenue. He added that the government will send notices to 7.2 million tax evaders via third parties as it doesn’t trust FBR. “We fear that FBR will strike a deal with tax evaders,” he said, adding that the government has withdrawn power of arrest given to the FBR’s assistant commissioners.

On June 15, it was reported that the burden on the public would likely increase in the next financial year owing to a potential increase in electricity and gas tariffs by October this year. The increase, however gradual, will be made on the demand of the IMF as an attempt to break the deadlock between Pakistan and IMF on the issue.

The author is a business correspondent based in Islamabad.

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