Pakistan, IMF complete talks with key commitments on taxation

Islamabad: The five-day talks between Pakistan and the IMF concluded on Friday, with Pakistan successfully convincing the IMF of the provincial budget surplus.

On the final day, the IMF mission held discussions with the federal finance minister, provincial governments, and the FBR.

Pakistan achieved partial success on agricultural tax, and the government assured the IMF of securing external financing. The IMF emphasised meeting annual tax targets and implementing agricultural income tax measures.

The IMF mission is expected to return to Pakistan for the first economic review under the loan program in February or March.

In addition, Finance Minister Muhammad Aurangzeb met the IMF delegation for a farewell discussion, reaffirming Pakistan's commitment to strict adherence to the loan programme. The government also committed to reforms in the tax and energy sectors, alongside addressing external financing gaps.

The IMF team raised detailed questions with provincial representatives, reviewed property prices in various cities, and expressed approval of a Rs3,000 increase in BISP stipends starting January 2025. They stressed the need for faster legislation on agricultural income tax and super tax, similar to Punjab's efforts.

Sources revealed that Pakistan has the potential to generate Rs2,300 billion in tax revenue from agriculture and livestock, but collection remains minimal. The Finance Ministry presented revised figures, showing a surplus of Rs360 billion in provincial budgets, exceeding the IMF target of Rs342 billion for the first quarter.

The FBR chairman and members briefed the IMF mission on the strategy to meet the annual tax target of Rs12.97 trillion and formalise the economy, including a plan to monitor factory production through a software tool called "Digital Eye."

The IMF mission is expected to visit Pakistan for the first economic review under the $7 billion loan programme in early 2025.