Islamabad (TDI): Finance Minister Muhammad Aurangzeb on Tuesday said that discussions between the International Monetary Fund (IMF) and Pakistan for the first biannual review of the $7 billion program had started, adding that the country was “well-positioned” for the negotiations.
Pakistan and the IMF had reached a three-year, $7 billion aid package deal in July, with the new program set to allow the country to “cement macroeconomic stability and foster conditions for stronger, more inclusive and resilient growth”.
A 9-member mission from the IMF has started its first biannual review of Pakistan’s $7 billion Extended Fund Facility (EFF).
“They are here. We will have two rounds of negotiations, first technical and then policy level,” Aurangzeb said.
The IMF delegation, led by Nathan Porter, will hold discussions with Pakistani authorities for ten days from March 3 to 14, assessing Islamabad’s compliance with quantitative performance criteria, structural benchmarks and indicative targets under the 37-month program.
The ongoing 37-month EFF program consists of six reviews over the life of the bailout, and the release of the next tranche of approximately $1 billion will be contingent on the success of the performance review.
Read More: IMF Mission in Pakistan for Economic Review
Just before the IMF mission’s visit, the Bank reiterated last week that its program aimed to raise Pakistan’s notably low tax-to-GDP ratio by 3 percent of GDP while improving the fairness and efficiency of the tax system by broadening the tax base and improving tax compliance.
Three key areas of focus include: expanding direct taxes by bringing property owners, retailers and agricultural income into the tax net; rationalizing personal and corporate income taxes by slashing exemptions and streamlining rates in the general sales tax system; and expanding Federal Excise Duty coverage and eliminating tariff exemptions to increase customs revenue.
Read More: IMF, Pakistan Begin Talks on $1b Climate Financing
Last year, the salaried class became the third-largest income tax contributor, trailing banks and petroleum but surpassing textile exporters.
