Pakistan's Tax Shortfall Major Concern in Implementation of USD 7 Billion Loan: IMF

Islamab: IMF has flagged Pakistan's tax shortfall and a delay in materialising foreign loans, among or issues, as challenges in implementing USD 7 billion loan package.

At end of International Monetary Fund (IMF) mission, which for five days held in-depth meetings with Pakistan officials about implementation of conditions linked with loan, global lender also expressed concerns about Punjab's new agriculture income tax law which is still not fully aligned with federal legislation and deviated from National Fiscal Pact, Express Tribune reported.

A source said IMF mission flagged two major concerns on Friday: Federal Board of Revenue (FBR) 's underperformance and a delay in finalising loans to fill USD 2.5 billion gap.

global lender again asked Pakistan to contact Riyh to secure oil on deferred payments and request Beijing to reschedule debt.

In dition, IMF h concerns about delay in privatisation of power distribution companies (DISCOs) and stuck to its condition of amending Pakistan Sovereign Wealth Fund Act by end of December.

IMF emphasised amending gas sector's definition of circular debt and ensuring its monthly reporting. Both power and petroleum divisions do not regularly report se numbers.

IMF also found flaws in implementation of National Fiscal Pact signed by all five provincial finance ministers to align income tax rates and transfer some expenditure responsibilities to provinces.

sources said IMF asked property tax and agriculture income tax regime by provinces to be brought in line with FBR through legislation.

Although Punjab Assembly passed Agriculture Income Tax Amendment Act of 2024, it fell below desired target of raising agriculture income tax rates to 45 per cent.

Punjab Information Minister Azma Bukhari denied any breach of pact and said newly amended provincial law dressed needs of National Fiscal Pact.

"It's not in any breach. Even IMF has re amendments and is fine with m." "If re is any breach n IMF would have said that during last two days' meetings," information minister said.

In dition to Punjab, Sindh government also violated National Fiscal Pact as it did not show any serious intention to implement it during meetings with IMF, sources said.

In yet anor major development, finance ministry on Friday withdrew its October 31 report saying Punjab government ran a budget deficit of Rs 160 billion, missing overall cash surplus target of Rs 342 billion.

Pakistani authorities however claimed IMF h not yet given its final verdict on issue of bridging revenue shortfalls and would send "asks" after consultations with its hequarters in Washington. 

(Except for heline, this story has not been edited by Republic and is published from a syndicated feed.)