Pakistan’s tax shortfall major concern: IMF

The IMF has flagged Pakistan’s tax shortfall and a delay in materialising foreign loans, among other issues, as challenges in implementing the USD 7 billion loan package.

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

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

The global lender again asked Pakistan to contact Riyadh to secure oil on deferred payments and request Beijing to reschedule debt. In addition, the IMF had concerns about the delay in the privatisation of the power distribution companies (DISCOs) and stuck to its condition of amending the Pakistan Sovereign Wealth Fund Act by the end of December.

The IMF emphasised amending the gas sector’s definition of circular debt and ensuring its monthly reporting. Both the power and the petroleum divisions do not regularly report these numbers. The IMF also found flaws in the implementation of the National Fiscal Pact.