Pakistan all set to impose new levies ₹200 bn to comply with IMF conditions
1 min read . Updated: 29 Jan 2023, 11:06 PM IST
Premium- As per details, the drafts are a bid to overcome the worst economic crisis in the country after Pakistan accepted IMF demands.
Days after it accepted International Monetary Fund's (IMF) demands to resume a stalled loan programme, Pakistan has prepared two draft ordinances to impose ₹200 billion in new taxes, Dawn quoted an official as saying on 28 January.
As per details, the drafts are a bid to overcome the worst economic crisis in the country after Pakistan accepted IMF demands. The two draft ordinances prepared for ₹100 billion each in taxes and flood levies.
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Meanwhile, the neighbouring country is also considering discontinuing power subsidies, imposing sales tax on raw materials for exports, as well as, hikes in power, and gas tariffs are also on the agenda.
The report quoted that the IMF team is expected to reach Islamabad on 31 January. The follow took place after Prime Minister Shehbaz Sharif gave assurance for implementing these policy measures, which were delayed for almost four months for political reasons as they could have fuelled already-high inflation.
A tax official said that both the ordinaces have been prepared and there would be an increase in withholding tax rates and regulatory duty on luxury items. Besides, the massive devaluation of the rupee in the outgoing week is also expected to generate additional revenue for the Federal Board of Revenue (FBR).
The government will collect the flood levy and use it to bridge a shortfall in the petroleum development levy (PDL), reported Dawn.
As per IMF estimation, under the PDL there is a shortfall of ₹300 billion and asked the finance ministry to increase this levy to ₹50 per litre on petrol and diesel from ₹35 at present.
The government had to accept IMF conditions after the lender refused to budge, however, the damage has been done, with foreign exchange reserves falling to a multi-year low of $3.68 billion, barely enough to cover three weeks of imports, reported Dawn.
With agency inputs.
