Government increases general sales tax (GST) rate to 18%, another petrol hike expected to meet IMF demands
The government on Tuesday increased the general sales tax (GST) rate to 18% and drastically enhanced taxes on cigarettes with immediate effect to collect Rs115 billion out of the planned Rs170 billion mini-budget. The government is likely to drop another petrol bomb on the masses on Feb 16 after it already jacked up the prices by Rs35 per litre on Jan 29.
The Supreme Court directed wealthy organisations, earning over Rs150 million, to deposit 50% of the super tax imposed on them with the Federal Board of Revenue (FBR) within seven days, as IMF tightens the noose around government to ‘do more’ for next bailout. The FBR has projected Rs250bn from the imposition of the super tax in FY23.
Federal Finance Minister Miftah Ismail asked Khyber Pakhtunkhwa Finance Minister Taimur Khan Jhagra to resign and PTI Senator Shaukat Tarin to quit politics for trying to sabotage Pakistan’s interests after audio leaks of their conversation regarding the resumption of the crucial International Monetary Fund (IMF) programme surfaced on Monday. The federal minister alleged that Jhagra had sent the letter to the IMF before sending it to him.
The top International Monetary Fund (IMF) official in Islamabad has confirmed Pakistan had met the final precondition for the seventh and eighth review under a $6 billion loan program. Pakistan met the last condition by increasing the petroleum development levy (PDL) on July 31. The PDL was raised by Rs10 on petrol and by Rs5 each on HSD, kerosene and light diesel oil (LDO).
Moody’s Investors Service – one of the world’s top three credit rating agencies – on Thursday downgraded Pakistan’s outlook from stable to negative. The decision to change the outlook to negative is driven by Pakistan’s heightened external vulnerability risk and uncertainty around the sovereign’s ability to secure additional external financing to meet its needs, the rating agency said in its report.
The International Monetary Fund (IMF) has asked Pakistan to freeze all major non-development expenditures heads, including salaries and defence, in order to bring down primary deficit. The IMF staff proposed Pakistan to to undertake massive fiscal adjustments of Rs1,150 billion to bring down primary deficit at negative 0.4 percent of GDP for the upcoming budget 2020-21 post COVID-19 pandemic.
Pakistan has received $1.39 billion by the International Monetary Fund (IMF) to shore up economy, according to the State Bank of Pakistan’s tweet. This is a loan under the Rapid Financing Instrument. It was approved by the IMF on April 17 to bolster the economy during the COVID-19 pandemic. It is expected to meet urgent balance of payment needs that have arisen due to the pandemic.
The four provinces jointly provided a whopping cash surplus of Rs202 billion to the Centre during the first quarter (July-September) of the current fiscal year to help meet its fiscal targets committed to the International Monetary Fund (IMF). The provinces did not utilise more than one-fourth of the funds for the welfare of their citizens made available to them under their total revenue.
International Monetary Fund (IMF) Resident Representative Teresa Daban has said that it is essential for Pakistan to exit the grey list of the Financial Action Task Force (FATF) in order to secure private sector credit to meet external financing needs. “Failure to exit from the FATF grey list is a risk to the recently approved $6 billion IMF deal,” said Daban.
Minister of State for Revenue, Hammad Azhar, revealed in National Assembly on Friday that Pakistan Tehreek Insaf (PTI) has set a new precedent by retiring $9.5 billion foreign loans in first year of power. He also added that Pakistan’s foreign loans rose by $2.7bn as compared to last year of PML-N government when foreign debts increased by over $7bn.