By BR Web Desk

Advisor to the Prime Minister on Finance and Revenue Shaukat Tarin has said that the government will announce a ‘mini-budget' next week, a statement that comes after a staff-level agreement was reached between the International Monetary Fund (IMF) and the Pakistani authorities.

The completion of the review, subject to IMF Executive Board approval, would make available SDR 750 million (about $1,059 million).

The IMF said that this will bring total disbursements under the Extended Fund Facility (EFF) to about $3,027 million and help unlock significant funding from bilateral and multilateral partners. However, it is subject to completion of actions by the Pakistan authorities.

While talking to a private channel, Tarin said that the government would withdraw tax exemptions worth Rs350 billion in the upcoming mini-budget.

Speaking on the agreement reached with the IMF, he said that the latest agreement with the fund is different from the previous one, “where we agreed on tougher conditions such as the imposition of Rs700 billion in new taxes, which we managed to reduce to Rs350 billion".

Tarin further said that the IMF wanted the electricity tariff to be increased by Rs4.85 per unit, but we made them agree on half of it. “We are increasing electricity tariff by Rs1.68 per unit.”

Tarin said that these conditions with IMF were agreed in March before he was appointed finance minister.

“However, I was against tax pyramiding and in favour of tax broadening. Further increase in electricity tariff would make the industry non-competitive.”

Talking about exchange rate volatility, Tarin opined that until the inflation rate is brought under control, stability cannot be achieved in the exchange rate.

The advisor stressed the need of stabilising the exchange rate to overcome inflation, adding that the government is trying to lessen the burden on people of low-income groups.

Replying to another question about tax collection targets, he said the assessment would be made on real assets of the people so that actual tax could be imposed on them.

On Monday, the advisor had said that the government has decided to increase the Petroleum Development Levy (PDL) by Rs4 every month to eventually take it to Rs30 as part of the negotiations with the IMF.

Pakistan's economy has come under increasing pressure in recent months with the rupee hitting its all-time low on multiple occasions. A widening current account deficit, higher import bill, and faster pace of inflation have put policymakers at unease. However, the government believes a growth rate of 5% this fiscal year is still achievable.

This article was first published in Business Recorder on Nov 24, 2021.