IMF hails taxation measures

International Monetary Fund (IMF) has said that the revenue measures recently taken by the government of Pakistan are 'welcome' as 'fiscal consolidation in the current year is important to provide a basis for long-term growth in Pakistan'.
During a online press briefing, Caroline Atkinson, Director, External Relations Department of IMF, said that some of the expenditure and revenue measures that the government has taken were necessary to stabilise the country and provide a basis for long-term growth in Pakistan.
She said that IMF is in close contact with the government of Pakistan while the dates for another mission are yet to be finalised. IMF maintains that the government of Pakistan must implement structural reforms. According to the IMF statement on the occasion of the 2010 Pakistan Development Forum on 15 November, 2010, "Structural reforms are needed to improve budgetary performance. Two areas stand out.
One is the reformed general sales tax (RGST), including an effective input-crediting mechanism, reduced exemptions, and elimination of zero-rating and special rates. The other is electricity reform, where action is needed to eliminate untargeted subsidies while addressing load shedding and protecting the poor, and address the problem of circular debt".
David Hawley, Senior Advisor, External Relations Department of IMF, pointed out during a press statement in October 2010, "we extend loans to our member countries at their request. The agreement to give a loan and the size of the loan is dependent on the quality of the economic policies. And that describes exactly the circumstances in which the current standby arrangement has been agreed and disbursed with Pakistan".
The government's stance on the imposition of 15 percent flood surcharge, 2.5 percent excise duty, 2 percent increase in the power tariff per month, increase in special excise duty from one percent to 2.5 percent and withdrawal of 17 percent general sales tax exemptions on fertilisers, pesticides and tractors, end to zero rating on plant, machinery and equipment and parts while restricting zero-rating on the export of textiles, carpets, leather, sporting and surgical goods only to registered manufacturers and exporters, shows that in the current deteriorating economic scenario, Islamabad's focus is on the restoration of the stalled penultimate tranche of the SBA of $1.7 billion. Atkinson, during a press briefing on June 17, 2010 emphasised that 'what's important is that sufficient fiscal measures in VAT are implemented, and also that there is action on the budget subsidies for energy'.