Islamabad: Pakistan and IMF are set to discuss the possibility of reducing the FBR’s target below Rs12.5 trillion during talks.
The International Monetary Fund may reduce the tax collection target to below Rs12.5 trillion due to the overall slowdown in economic activity and the huge shortfall so far.
According to government sources working with the IMF team, the IMF program aims to generate a primary budget surplus of Rs1.2 trillion this fiscal year.
The IMF has also asked the Energy Ministry to share its estimates of circular debt for the next fiscal year.
The Power Division assured the IMF that the circular debt in the current fiscal year will remain below the target of Rs2.429 trillion.
The IMF and Pakistani officials met for the third consecutive day on Wednesday to discuss the performance of the energy sector, progress on the publication of various socio-economic surveys by the Pakistan Bureau of Statistics.
Budget numbers and external financing requirements were also discussed. Government sources said the two sides discussed the possibility of reducing the tax target from Rs12.3 trillion to Rs12.5 trillion.
He added that tax authorities have suggested reducing the target by Rs579 billion compared to the annual target of Rs12.913 trillion.
The sources said the IMF had hinted at reducing it by Rs435 billion to less than Rs12.5 trillion but no formal decision has been taken.
The FBR has planned to reduce tax rates for tobacco, beverages and construction sectors to generate another Rs90 billion through economic activity and improved sales.
The IMF has set a condition for generating a primary budget surplus that is less than 1 percent of the size of the economy, or Rs 1.2 trillion.
Any reduction without adjusting expenditures could compromise this goal. Officials believe that additional efforts could yield about Rs 130 billion.
