Pakistan needs to introduce additional measures to align the budget for FY2022-23 with key program objectives. This was stated by the International Monetary Fund’s (IMF) resident representative, Esther Ruiz Perez, in response to a query by ProPakistani.
She said, “Our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key program objectives. Fund staff stand ready to continue to support the authorities’ efforts in this respect and, more generally, in the implementation of policies to promote macroeconomic stability.”
The coalition government introduced the Rs. 9.5 trillion budget for 2022–23 on Friday, and Perez subsequently remarked, “We note the submission of the draft budget to the National Assembly last Friday. Discussions with the authorities continue to obtain more clarity on certain revenue and spending items and allow for a full assessment”.
The federal Minister for Finance, Miftah Ismail, recently said that the IMF still has concerns about the widening current account deficit, fuel subsidies, and the need to increase more direct taxes.
The government is likely to remove the remaining subsidies on petroleum products soon.
While addressing a post-budget conference, ‘Pakistan’s Economy-Way Forward’ organized by the Institute of Chartered Accountants of Pakistan (ICAP), Minister Ismail said that Pakistan will default if the government does not abolish subsidies on petroleum products.
The IMF is also dissatisfied with the new income tax slabs for the salaried class under the budget FY2022-23. Reliable sources informed ProPakistani that the proposed tax cut on Personal Income Tax (PIT) of Rs. 47 billion is completely unacceptable to the IMF.
The lender wants the coalition government to limit tax cuts to people earning up to Rs. 200,000 per month and direct relief toward urban and middle-class citizens to raise tax rates across all brackets.