The Inter-national Monetary Fund (IMF) has not been able to successfully persuade Pakistan Muslim League (N) to vote for 'Reformed' General Sales Tax Bill 2010 approval from the Parliament, it was learnt.
Sources said that during the meeting with IMF, PML-N delegation led by Punjab Chief Minister Shahbaz Sharif politely turned down the IMF request to support the federal government on RGST, saying that a 10-point economic reform agenda proposed by his party could help reduce fiscal deficit.
He also said that the implementation of the reforms agenda would bring down unproductive expenses, eliminate corruption and improve the governance system. Ishaq Dar reported to have told the IMF that in principle his party is not against the implementation of the RGST and documentation of the economy, but the government first needs to correct the existing tax system. He is said to have underscored the need for plugging leakages in the existing tax system. According to the PML-N, the government should adopt austerity measures from top to bottom, reduce the size of the Cabinet and take necessary measures to plug the leakages in public sector in an effort to control the fiscal deficit.
Dar said that Punjab government has recently carried out an exercise to minimise the expenditure which would be presented to the economic team today (Wednesday), saying that a significant amount of resources could be saved from the restructuring of State Owned Enterprises (SOEs).
The IMF view point was that the RGST and reforms in power sector are critical for macroeconomic stability and sustainable budget deficit otherwise financing of fiscal deficit by borrowing from the central bank will continue to stoke inflation. The Muttahida Quami Movement (MQM) is reported to have refused to lend support to RGST and said that the government should also bring agriculture sector and other exempted sectors into the tax net.
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