Islamabad: Pakistan has reached a broad agreement with the International Monetary Fund (IMF) in reference to the 2022-23 fiscal budget of Rs 9.9 trillion with the government agreeing to announce and impose new taxes on earnings and petroleum levy from July 1.
As per official sources, IMF and Pakistan have mutually agreed to impose at least Rs 50 per litre petroleum levy, which will be done through a gradual and consistent increase from August 2022 onwards.
Miftah Ismail, Federal Minister for Finance said, “we have locked the budget for fiscal year 2022-23 in consultation with the IMF and now the Fund will consult with the State Bank of Pakistan on monetary targets.”
Miftah also confirmed that the fiscal budget will be increased to Rs 9.9 trillion, which will be an increase of at least Rs 400 billion against Rs 9.5 trillion budget, presented earlier this month.
As per details shared of the broad agreement with the IMF, the budget’s surplus target, revenues excluding interest expenses has remained unchanged to Rs 152 billion while the overall budget target also remains the same at Rs 3.8 trillion, which makes 4.9 per cent of the GDP (Gross Domestic Product).
However, the target for the Federal Board of Revenue (FBR) has been revised to Rs 7.440 trillion against previously set target of Rs 7 trillion.
“The government has also decided to impose 1 per cent Income Support Levy on people and companies earning Rs 150 million a year, 2 per cent on those having income of Rs 200 million, 3 per cent additional rate has been proposed for Rs 250 million annual earners and 4 per cent for Rs 300 million annual income”, said an official of the finance ministry.
“We have had to agree to IMF demand to impose 2.5 per cent income tax on those earnings from Rs 600,000 to Rs 1.2 million per annum. It is still half of the rate the people in this income bracket are currently paying,” said Miftah Ismail.
It is pertinent to mention that the broad agreement with the IMF falls short of a staff level pact, for which, Pakistan has been in negotiating with the IMF team; experts believe that the broad agreement will bring some confidence in the market and get it out of its uncertainty that took a heavy toll on the country’s currency, triggering a wave of inflation and eroding the confidence of the markets and investors.
Pakistani rupee has been shedding its value against the US dollar and closed at Rs 211.52 to a dollar in the inter-bank, which is by far, the country’s highest rate of currency against the dollar in history.