The International Monetary Fund (IMF) has asked the government to curtail its expenditure and increase revenue for repayment of its loan given to Pakistan under Stand-by-arrangement (SBA), officials of Finance Ministry said on Monday. They said that the IMF like any bank wanted guarantee that its money would be paid back and the emphasis of its delegation during the talks was that the government should control its expenditure and increase revenue to make it happen.
They said that the government wanted to develop consensus on reformed GST in integrated form prior to talks with the IMF review mission in Washington. "We would like to have a meeting with the IMF authorities when we have something to give which could make them comfortable in the future," they said adding that GST implementation is not only their requirement but the government also wanted to implement it for broadening the tax base. The implementation of GST would gear up the documentation of the economy and increase revenue.
They said that there are three types of opposition to the GST; by the provinces who wanted to exercise their legitimate right of sale tax collection on services; by the people, who think this would be an additional tax; and also by those who had the fear that the implementation of GST would bring them into the tax net.
About fiscal deficit, they said that fiscal deficit higher than what was committed with the IMF for last year would be difficult for the Pakistan delegation to defend during the talks. However, they said that there are reasons for it and Pakistan delegation would explain to them.
Officials said that the Ministry of Finance has initiated talks with the provinces in an effort to develop consensus and would try to reach an agreement during the meeting of political leadership being held on Tuesday with Prime Minister Syed Yousaf Raza Gilnai.
When asked whether the IMF Board meeting has been delayed because of GST, they said that the reason for delay in IMF Board was because most of its directors would be on leave in the first week of August. "The delay in the board meeting would help us meeting all the members during the next review of Pakistan economy.