Cash-strapped Pakistan is set to miss International Monetary Fund's condition to refund Rs 75 billion to taxpayers. country will likely miss condition in first quarter despite an incentive by global lender, a media report said on Friday. International Monetary Fund (IMF) h offered to soften tough primary budget deficit reduction target if country performs better in tax refunds. A loan deal of USD 6 billion is in place.

IMF Approves $6 Billion Loan To Pakistan; Sends In SOS Mission

Pakistan expected to reduce primary budget deficit

Under USD 6 billion IMF loan deal, Pakistan is required to reduce primary budget deficit, calculated by excluding interest payments, to Rs 276 billion in current fiscal year 2019-20 from last year's level of Rs 1.350 trillion, Express Tribune reported. According to IMF, first quarter's primary budget deficit target is Rs 102 billion, which can be relaxed to an extent if government pays more than Rs 75 billion in tax arrears. Against quarterly target of reducing tax arrears by Rs 75 billion, Prime Minister Imran Khan-led government has so far cleared Rs 22 billion of arrears, which are only 30 per cent of targeted amount, according to figures released by Federal Board of Revenue (FBR) this week. If government released remaining Rs 53 billion, it would versely hit challenging quarterly revenue target of Rs 1.071 trillion, also given by IMF.

RE: Pakistan Skips SCO Military Medicine Conference Hosted In India

FBR has set Rs 1.111 trillion target for July-September quarter, report said, quoting sources. key reason behind low disbursement of tax refunds was a highly ambitious annual revenue collection target of Rs 5.5 trillion. Despite setting a relatively low target of Rs 644 billion, FBR could collect only Rs 580 billion in July and August, missing two-month goal by Rs 64 billion. Sources said FBR's plan was to release a certain amount of refunds through promissory tes that it issued at a fixed rate of 10 per cent. y said promissory tes could t be issued at a faster pace due to banks' reluctance to accept se tes as collateral. State Bank of Pakistan (SBP) was also unwilling to treat se tes as part of statutory liquidity ratio of banks, report said.

RE: India Briefs UNHRC Chief About Pakistan-sponsored Terrorism In J&K

SBP view on situation

SBP's view was that se tes could t be treated as a debt due to certain legal obstacles, according to FBR sources. Both targets of enhancing revenues and clearing refunds were contrictory in nature for FBR, which has shown inflated collections on many occasions by blocking refunds. According to report, viser to Prime Minister on Finance Abdul Hafeez Shaikh held meetings with FBR officials aimed at kwing status of tax refunds and possibility of collecting Rs 5.5 trillion. initial assessment was that re was possibility of collecting more than Rs 4.8 trillion in given ecomic conditions, said sources. FBR's Member Inland Revenue Policy Hamid Atiq Sarwar told National Assembly Standing Committee on Finance last week that FBR may collect Rs 4.8 trillion to Rs 5.2 trillion in taxes.

"Total outstanding refunds stand at over Rs 500 billion," a top FBR official told daily a few days ago.

RE: Pakistan Minister mits Govt Spent Billions On Terror Outfit JuD

figure has been compiled on basis of individual reports received from all field formations. However, FBR h t shared Rs 500 billion arrears with IMF. It has shared only processed refunds, which have also t yet been finalized, report said. In upcoming review of IMF programme, Pakistan and IMF will again discuss refund payment target as government's understanding is that current year's refund payments should only be according to current year's flow of refunds. But IMF indicative target required government to return Rs 75 billion to taxpayers in first quarter and n Rs 57.5 billion in each of remaining three quarters.

IMF staff-level report has shown that global lender has linked refund payments with primary budget deficit target. If government releases more than Rs 75 billion in refunds before September 30, primary budget deficit target of Rs 102 billion will be relaxed by same amount. However, it seems government has missed opportunity of providing relief to industrialists by t taking vant of this incentive.

RE: Pakistan Apprehends FATF Blacklisting Over Poor APJG Ratings