Pakistan was “doctrinaire” about any element of the budget 2023-24 and was “keenly engaged” with the International Monetary Fund to reach an amicable solution, the finance ministry said on Friday.

“The government is fully committed to the IMF programme and is keen to at least complete the 9th review,” said the statement that was issued to clarify the government’s position on issues related to the loan. “The coalition government has already taken many difficult and politically costly decisions in this context.”

The reaction comes after the international lender expressed dissatisfaction with Pakistan’s recently presented budget. Esther Perez Ruiz, the IMF’s resident representative for Pakistan, was of the view that the cash-strapped country missed an opportunity to broaden the tax base in a more progressive way

But hours after the statement, Finance Minister Ishaq Dar claimed that the IMF wanted Pakistan to become Sri Lanka and blamed the geopolitics for the stalled loan programme.

“We can’t believe everything IMF says,” he told the Senate Standing Committee on Finance on Thursday. “They want us to become Sri Lanka, default, and then negotiate.”

The finance minister clarified that the ninth review of the loan programme was conducted in early February 2023 and the government “completed all technical issues at a fast pace”. The only outstanding issue was of external financing, which the government claimed was also “amicably” resolved in Prime Minister Shehbaz Sharif’s telephonic conversation with IMF MD Kristalina Georgieva May 19, 2023.

“Though the budget FY-24 was never a part of the ninth review, however in line with the PM’s commitment to the IMF MD, we shared the budget numbers with the IMF mission. And we are continuously engaged with them even on the budget,” it said.

On the specific issues raised by Esther Perez Ruiz, the IMF’s resident representative for Pakistan, the ministry’s position was as under:

• As far as the broadening of the tax base is concerned, the FBR has added 1,161,000 new tax payers ie 26.38% to its tax base in the last 11 months. This is an on-going exercise and will continue. The 0.6% advance adjustable withholding tax on cash withdrawals over Rs.50,000 is another big step in this direction.

• The tax-exemptions that have been announced in the Budget are “triggers” of growth in the real sectors of economy. This is the sustainable path to provide employment and livelihood to the common citizen. In any case, the amount is fairly small.

• On BISP allocation, the pro-poor initiatives in the Budget are not limited to BISP beneficiaries whose budget in any case has been increased from 400 to 450 Billion. (This was last raised by GoP in Feb 2023 from Rs. 350 to Rs. 400 Billion). There are millions of vulnerable people above the poverty line and the Budget provides Rs. 35 Billion for targeted subsidies on five main items of food consumption through the Utility Stores Corporation for families upto a PMT scorecard 40. This facility is also available for BISP beneficiaries.

• As far as the “amnesty” is concerned the only change is to “dollarize” the value of an existing provision of I.T. Ordinance. This facility, which has always been there, is available under section 111(4) of the I.T Ordinance. The cap of Rs. 10 Million (approx. $ 100,000 equivalent) was introduced in FY 2016. The cap set in FY 2016 is being resolved in terms of rupee equivalence of $100,000.