Washington: Pakistan and the International Monetary Fund (IMF) have reached a staff-level agreement. Pakistan will need to improve the management of state-owned enterprises.
According to a statement issued by the IMF, the final approval for the new loan program will be given by the IMF’s Executive Board. Under the new staff-level agreement, Pakistan will receive $7 billion over a period of 37 months.
The program includes measures to strengthen fiscal and monetary policies, broaden the tax base, and extend facilities for economic stabilization under the 2023 Stand-By Arrangement. The IMF stated that inflation has decreased in Pakistan over the past year and foreign exchange reserves have improved. This economic stabilization in Pakistan will be a catalyst due to the new loan program.
The IMF mentioned that for economic stabilization, Pakistan will increase tax revenue and during the loan program, the tax component of GDP will be increased by up to three percent. There will also be an increase in retail sector taxes, while the agricultural sector in Pakistan will be brought into the tax net. There will be a 1.5% increase in tax revenue in the current fiscal year.
Under the agreement with the IMF, Pakistan will increase the number of taxpayers. Increasing tax revenue will provide more funds for social sectors. Cooperation from mutual friends will be very important for achieving these goals. There will be a fair increase in direct and indirect taxes in Pakistan and better tax collection will be made from the income sector. Increasing taxes will provide more resources for education and public health. According to the IMF statement, the purpose of the program is to strengthen microeconomics in Pakistan. The program will help achieve sustainable development in Pakistan. There will be reforms in fiscal and monetary policies and improvement in the management of state-owned enterprises. Pakistan will have to provide an equal environment for investment and increase human resources while increasing social protection under the Benazir Income Support Program
