Islamabad, Sep 27: IMF Demands Subsidy Cuts in Pakistan
Pakistan is facing stricter conditions as part of the recently approved $7 billion loan program from the International Monetary Fund (IMF).
According to sources from the Finance Ministry, IMF Demands Subsidy Cuts at no more than 1% of its GDP. Additionally, the government has committed not to issue any supplementary grants during the duration of the IMF program.
The IMF will also directly monitor provincial expenditures to ensure adherence to agreed fiscal measures. Ongoing negotiations between the federal government and provinces regarding the National Finance Pact are critical, as the IMF aims to prevent Pakistan from exceeding its fiscal limits.
To broaden its tax base, Pakistan plans to include the agriculture, property, and retail sectors in the tax net. As part of its reform efforts, the government is developing a strategy to lower electricity prices, which may involve revising power purchase agreements in the energy sector.
However, the Government of Punjab will no longer be permitted to provide relief on electricity prices, nor will support prices for food grains be established.
Moreover, the IMF has requested a revision of the National Finance Commission (NFC) award formula, which regulates the financial resource distribution between federal and provincial governments.
