IMF asks Pakistan to end subsidies, tax concessions

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Observer Report
Washington

Despite efforts by Federal Minister for Finance Shaukat Tarin to seek the International Monetary Fund’s support for the government’s economic policies, the latter rejected his proposal of not withdrawing the subsidies announced to facilitate the masses, sources said on Saturday.

Tarin had a meeting with the IMF Managing Director Kristalina Georgieva in Washington yesterday (Friday) at which he and the IMD chief discussed the Fund’s programme for Pakistan.

The finance minister, on the occasion, briefed the IMF MD about recent increase in the prices of gas and electricity, while the MD, on the other hand, conveyed to him the Fund’s terms and conditions.

Apart from that, he also informed him of the tax collection made by the government. The IMF official suggested to Tarin to end subsidies and concessions in sales tax of over Rs300 billion besides bringing more and more people into the General Sales Tax net.

Meanwhile, Finance Minister Shaukat Tarin Saturday, addressing a seminar at the Embassy of Pakistan in Washington, said that the International Monetary Fund will validate data and statistics on power, gas tariffs and tax collection.

“We are here to finalise our matters with the IMF,” he said. “We have told the IMF to validate the data we have shared with them.”

The minister said that Pakistan has reached an agreement with Independent Power Producers (IPPs), the details of which will be announced in a couple of days.

Tarin said the government had achieved its growth targets in various sectors, adding that it had provided relevant details to the IMF. Tarin said his meeting with IMF Director Kristalina Georgieva was a cordial and “very positive” one.

The finance minister said Prime Minister Imran Khan and his government was focused on bringing about economic reforms in the government. “Pakistan has undertaken sincere efforts to being about economic reforms,” he said.

“The IMF director appreciated Pakistan’s progress in implementing its programme”. Speaking about his US tour, Tarin said he held meetings with the president of the World Bank, the US-Pakistan Business Council and also attended a meeting at the US Institute of Peace.

“We held meetings on Afghanistan,” he said. “I met my Turkish counterpart and discussed bilateral cooperation in the agriculture, construction and tourism sectors with him,” he added.

The finance minister said Pakistan will provide targeted subsidies to 40% of the population, adding that the government has compiled a database according to which it knows the income of each household.

“We will provide subsidies on wheat, sugar and pulses,” he said. He spoke about the current account deficit, saying that it will remain stable.

“The current account deficit will not surge like it did in the past,” he said, adding that it will decrease gradually if the exchange rate is adjusted. Tarin said the government had kept a market-based exchange rate.

 

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