The International Monetary Fund (IMF) has stated that Pakistan needs to mobilize domestic tax revenue to fund much-needed social and development spending by keeping debt on a firm downward trend. This was stated by Director IMF Communications Depar-tment, Gerry Rice during a press briefing, uploaded on IMF website on Friday, when he was asked if Pakistan can be advised to cut subsidies and development spending to keep the primary deficit in line.
He further said, "And to that, I would say that one of the key elements of the program that the IMF is supporting in Pakistan, Pakistan's program, is the need to mobilize domestic tax revenue to fund much-needed social and development spending while placing debt on a firm downward trend."
And this was actually something that IMF Acting Managing Director David Lipton emphasized in his recent meeting a short time back with Prime Minister Imran Khan. He further stated, "Let me add that we expect an IMF team to be in Pakistan in the next few days, including our Director for that area, Jihad Azour will be there."
The government is facing a shortfall of Rs 64 billion in revenue collection target for the first two months of the current fiscal year with analysts as well as even government high officials in background discussion acknowledge that Rs 5.5 trillion revenue collection target is challenging for the Federal Board of Revenue (FBR) which has serious issues of capacity.
The government's policies of increase in discount rate, according to economists, led to economic slowdown and consequently increase in unemployment and poverty, which necessitate, more than ever before, more spending on social sector to protect the vulnerable. Sources in the Finance Ministry on condition of anonymity said that achieving primary deficit target of 0.6 percent agreed with the IMF for the current fiscal year would be difficult if the current trend of shortfall in tax revenue continues. Finance Ministry is heavily banking on non-tax revenue.
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