PM assures IMF of swift progress on institutional reforms

• IMF delegation led by Jihad Azour calls on PM Shehbaz.
• Discussions focused on implementation of ongoing IMF programme.
• PM tells IMF delegation Pakistan heading towards economic growth.

ISLAMABAD: Prime Minister Shehbaz Sharif reaffirmed on Thursday his resolve to expedite the process of institutional and macroeconomic reforms.

The prime minister made the remarks while meeting a delegation of the International Monetary Fund (IMF) led by Jihad Azour, which called on him in Islamabad.

“Pakistan is heading towards economic growth, after attaining economic stability,” said the premier.

During the meeting, the discussions focused on the implementation of the ongoing IMF programme in Pakistan. The two sides expressed satisfaction over the economic reforms undertaken by the government and their positive outcomes.

The IMF delegation also expressed the resolve for continued support from the fund in Pakistan's efforts for economic stability and growth.

According to a report by The News, the IMF has asked Pakistan to increase the Federal Excise Duty (FED) on fertiliser from 5% to 10% and impose a 5% tax on pesticides in the upcoming budget.

However, PM Shehbaz, along with his team, is making efforts to avoid or reduce the proposed tax rates on major inputs of the farm sector.

On Wednesday, the IMF’s visiting Director for the Middle East, Azour, held a meeting with Minister for Finance Mohammad Aurangzeb here at the Ministry of Finance for finalising the upcoming budget.

Shehbaz is trying to convince the IMF to avoid this burden on farm inputs when the Agriculture Income Tax (AIT) will become operational from the next budget, with effect from July 1, 2025. 

There are different estimates with regard to the AIT imposition, but in the short term, the provinces may generate Rs40 to 50 billion from farmers, but it’s premature to share any exact revenue projections.

“The revenues estimate for increased FED on fertilizer from 5 to 10 percent and slapping FED on pesticides at the rate of 5 percent is projected to fetch tax revenues of Rs30 to 40 billion from the pockets of farmers in the next fiscal year if the wish of the IMF is fulfilled,” top official sources confirmed while talking to The News. 

Another proposal under consideration between the IMF and Pakistan authorities is to ensure equivalent taxation of all sources of income and introduction of a single turnover-based registration threshold for both income and GST registration to all businesses in the upcoming budget.

Pakistan will benefit from WB’s development investment

Later, in a meeting with a World Bank delegation led by Managing Director of Operations Anna Bjerde, PM Shehbaz lauded the bank’s key role as an important development partner in Pakistan’s progress.

He said that his government was taking practical steps to achieve maximum benefits from the WB’s development investment.

He expressed the hope that the WB’s Country Partnership Framework (CPF) would bring more than $20 billion in development investment to Pakistan.

The prime minister also appreciated the WB’s assistance to the victims of 2022 floods in Pakistan that had impacted millions of people, destroying livelihoods and properties.

In her remarks, WB’s Managing Director Anna Bjerde said that the bank valued its historic partnership with the government of Pakistan for the development and prosperity of its people.

She also expressed special gratitude to PM Shehbaz for his effective role in strengthening the partnership and implementing the Country Partnership Program.

Also appreciating Pakistan’s recent exemplary economic performance and stability, she said that through its positive actions for macroeconomic stability, Pakistan had achieved the impossible.

She said that the WB looked forward to continued cooperation to achieve the positive outcomes of the Country Partnership Framework.

The managing director viewed that the prime minister’s leadership, his commitment to the uplift of the Pakistani people, policy continuity for sustainable and inclusive growth, and efforts to engage all stakeholders at the political level, made Pakistan a model for the World Bank’s partnership framework in other countries.

She said that due to the prime minister’s excellent and effective leadership, the Country Partnership Framework was being referred to globally as the “Pakistan Model”.

She expressed the hope that PM Shehbaz’s focus on practical actions would lead this partnership framework to success.

— With additional input from APP.