After the International Monetary Fund (IMF) criticized the Special Investment Facilitation Council and the ‘Sovereign Wealth Fund’, the government made drastic cuts in the Public Sector Development Program (PSDP), timely tariffs in the gas and electricity sectors. Committed to levy or increase withholding tax and excise duty on various goods to ensure adjustment, bring agriculture and retail sector into effective tax net and immediately meet revenue shortfall.
According to a document released by the IMF regarding the approved loan program of $7 billion, Pakistan is sticking to its commitments through a total of 22 structural benchmarks as of September 25 as the country faces five-year ( About $110.5 billion in external financing is needed during the period 2025 to 2029), which translates to about $22 billion annually.
The government has also decided to extend the scope of the trader-friendly scheme to 36 more cities to bring retailers into the tax net, which is currently implemented in 6 cities. will come together.
The government has also promised to ensure that all government officials (grades 17-22) declare their assets, but this will not be available for public scrutiny, but will be subject to the demands of banks, tax authorities and the Financial Monitoring Unit and Investigation Agency. will be accessible.
The government has also committed to privatize 4 power sector entities, including 2 distribution and 2 generation plants, this year.
As a contingency plan, the government will increase advance income tax on import of machinery, import of raw materials, industrial establishments and commercial importers and increase withholding tax on supplies, services, contracts and federal excise duty on beverages.
IMF staff have expressed concern over the creation of the Special Investment Facility Council and the establishment of the sovereign wealth fund, which includes about seven large for-profit institutions.
He said staff had highlighted the need to avoid a level playing field and a reduction in governance standards regarding the investment climate, issues that had to be addressed.
However, the government has promised additional measures to promote investment and ensure competitive neutrality and a level playing field.
The government also promised to amend the 2023 Sovereign Wealth Fund Act by the end of December to ensure that its state-owned enterprises return to the ‘SOE Act’ regime.
The government has committed to a 5% increase on fertilizers and pesticides in the next fiscal year 2026 budget.
Under the National Fiscal Agreement with the provinces, the four provinces have committed to amend their agricultural income tax systems by the end of October to incorporate federal personal income (smallholder farmers) and corporate income (commercial agriculture) taxes through legislative changes. Be fully compatible with systems.
