Pakistan has assured the International Monetary Fund (IMF) that it will implement measures to increase its revenue.
The IMF has released details of the agreement, stating that Pakistan will tax the agriculture and construction sectors, reduce subsidies in the energy sector, and cut expenditure on salaries and pensions. Funding for welfare programs will be increased, and import restrictions will be lifted. The government will not introduce new tax amnesty schemes or provide tax breaks.
The IMF expects Pakistan’s inflation rate to be 25.9% and the economic growth rate to be around 2.5%. The unemployment rate is projected to be 8% in fiscal year 2024. Pakistan’s fiscal deficit is expected to remain at 7.5% of the economy, and the debt ratio will be 74.9%.
Pakistan’s economy will be reviewed by the IMF in November 2023 and February 2024. The IMF emphasizes the importance of timely and accurate data, increased budget allocation for education and health sectors, and measures to boost tax revenues. Reforms in the power sector are deemed necessary, and monetary policy will need to be tightened to reduce inflation.
Pakistan will receive $3 billion under the Standby Arrangement Program and resources for its external financial needs. The report highlights the importance of the State Bank’s independence and the need for provinces to have a surplus budget to reduce the financial deficit. Petroleum levy collections are expected to increase significantly.