IMF Sets Ambitious Tax Target for Pakistan Amid Virtual Talks

The International Monetary Fund (IMF) has proposed a tax target exceeding Rupees 15 trillion for Pakistan's next budget, with talks nearing completion. Key discussions include increasing the tax-to-GDP ratio and opposing tax exemptions for international investments. The government anticipates economic growth driven by investments.

The International Monetary Fund (IMF) has set an ambitious tax target of over Rupees 15 trillion for Pakistan in its forthcoming budget, as cited by sources for ARY News. These virtual negotiations between the IMF and Pakistan have reportedly reached an 85% completion rate, centered around finalizing details for the imminent budget presentation in the National Assembly.

According to ARY News, the new budget aims to boost the tax-to-GDP ratio to 13% while garnering Rs 2,745 billion through non-tax revenue. The economy is expected to expand by over 4% in the next fiscal year, propelled by heightened investment and consumption. Previously, the IMF had advised the Special Investment Facilitation Council (SIFC) to avoid granting tax exemptions for international investments, particularly the Chaghi-Gwadar railway track project valued at USD 2 billion.

ARY News indicates that IMF officials assert that tax exemptions for international investments would adversely affect revenue collection in Pakistan. Despite the Pakistani government's solicitation for Gulf country investments in the Chaghi-Gwadar project, the IMF remains firm on its stand against SIFC's tax exemptions for international ventures.

Crucially, the SIFC has provided a platform for investment, aiding in transporting minerals from Reko Diq to Gwadar through a planned new railway line. During the IMF briefing, officials elaborated on these investment facilitation efforts and the upcoming construction of a mineral transport railway line, as highlighted by Ary News.

Concurrently, negotiations between Pakistan and the IMF also cover areas such as climate financing, electric vehicle infrastructure, and tariff reforms, according to ANI.

(With inputs from agencies.)