The government of Pakistan will announce a ‘mini-budget’ in the coming week. The advisor to the Prime Minister on finance and revenue Shaukat Tarin shared the news following the staff-level agreement between the International Monetary Fund (IMF) and the government.
Once the review is completed and the IMF Executive Board approves it, SDR 750 million (around $1,059 million) will be made available to Pakistan.
Tarin while speaking with a private channel said that the government would withdraw tax exemptions worth Rs350 billion in the upcoming mini-budget.
Talking about the agreement with the IMF, he shared that the latest agreement with the lender is different from the previous one, “where we agreed on tougher conditions such as the imposition of Rs700 billion in new taxes, which we managed to reduce to Rs350 billion”.
Tarin further explained that the IMF demanded the electricity tariff to be increased by Rs4.85 per unit, but we convinced them to agree on half of it. “We are increasing electricity tariff by Rs1.68 per unit.”
Tarin added that these conditions with IMF were agreed upon in March ahead of his appointment as the finance minister.
Tarin noted, “However, I was against tax pyramiding and in favour of tax broadening. Further increase in electricity tariff would make the industry non-competitive.”
Addressing the exchange rate volatility, Tarin said that until the inflation rate is brought under control, stability cannot be achieved in the exchange rate.
The advisor highlighted the need to stabilize the exchange rate to curtail inflation, adding that the government is trying to reduce the burden on people of low-income groups.
Earlier on Monday, the advisor had said that the government has decided to raise the Petroleum Development Levy (PDL) by Rs4 every month to eventually take it to Rs30 as part of the negotiations with the IMF.