ISLAMABAD: The government has assured the IMF in writing that it will ensure free funding, transparency while curtailing the powers of the Investment Facilitation Council, all special economic zones will be phased out.
Pakistan has promised the IM that a plan will be drawn up to completely eliminate all special economic zone privileges by 2035. This condition will severely hamper Pakistan’s efforts to implement the second phase of CPEC. .
The IMF staff report has also confirmed this. According to the report, the shortfall was Rs 63 billion more than the allowable limit, with the shortfall of the products exceeding one percent of the target, the coalition government had promised to bring a mini-budget in consultation with the IMF. The mini-budget will soon introduce more taxes on imports of professional service providers, contractors, machinery and raw materials and increase excise duty on beverages.
The document also confirms that the hands of the provinces are tied and they can no longer fix support prices on agricultural commodities, they cannot give subsidies. The agricultural income tax laws will have to be amended by the end of this month. Reforms in many public institutions for the sake of the $7 billion package will weaken the elite’s grip, but the loss of institutions and jobs will add unnecessary burdens to the public and may widen the rifts between institutions, the center and federal units. The written promises have been made by the Finance Minister Senator Muhammad Aurangzeb on behalf of the Government of Pakistan.
All these conditions are listed in the Memorandum for Economic and Financial Policies, which is signed by Finance Minister Mohammad Aurangzeb and Governor State Bank Jameel Ahmed. The government has also committed to increase the withholding tax by one percent on supplies to generate Rs 12 billion annually, increase the withholding tax by one percent on services for additional annual revenue of Rs 6 billion and contracts worth another Rs 6 billion. .
The government has also promised to increase the excise duty on aerated and sugary drinks by 5% to raise Rs 28 billion annually. The finance minister has assured that Pakistan will not give tax exemptions to all five governments by September 2024. There was a need to sign the National Fiscal Agreement. The Finance Minister had promised the IMF that we are taking steps to phase out federal and provincial governments’ price fixing of agricultural commodities by the end of FY 2026.
The IMF report confirmed another report on price-fixing, which stated that aid prices would be avoided, all transactions would be at market prices, and the dissolution of departments in the National Monetary Agreement would be of common interest. Subject to consensus being reached in the Council.
By February 2025, the Civil Servants Act will be amended to ensure that assets of high-level government officials and their families are digitized and accessible through the FBR.
