Miftah hopeful of IMF programme revival in 1-2 days

Finance Minister Miftah Ismail on Monday expressed optimism that the International Monetary Fund (IMF) programme will be revived in the next 24-48 hours, as the government looks to pacify its currency market that has seen the rupee plunge to record lows in recent days.

Speaking to journalists at the Parliament House, he stressed that the IMF also has no objections on the 15% increase in salaries of government employees announced in the budget 2022-23.

“The hike in salaries does not concern IMF as long as we have the money (for it),” he said.

Moreover, he stated that the IMF had no problem with income tax relief granted to people earning Rs1.2 million or less on a yearly basis. Earlier, a person earning Rs1.2 million per year was liable to pay Rs30,000 as income tax. Moreover, any amount earned above Rs1.2 million and not more than Rs1.8 million was taxed at 5%.

In the budget announcement for fiscal year 2022-23, however, the government reduced tax rates for people earning up to Rs1.2 million to a nominal amount of Rs100.

“The tax rate announced on a yearly income of Rs1.2 million will remain the same,” he said.

However, he added that total income tax relief worth Rs47 billion would see a "small reduction".

”The budget 2022-23 will offer relief to the lower income segment and high income earners will be taxed.”

On June 14, IMF Resident Representative in Pakistan Esther Perez Ruiz had stated that Pakistan would need to introduce additional measures to budget FY2022-23 in line with the key objectives of the bailout programme.

"Our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key program objectives," Ruiz said.

Earlier, Ismail said that the IMF had expressed concerns about the budget numbers, including fuel subsidies, a widening current account deficit, and the need to raise more direct taxes.

He, however, added that his government was confident they could adjust the budget to bring the IMF on board and was hopeful of securing a successful review this month.

Pakistan unveiled a Rs9.5 trillion ($47 billion) budget for 2022-23 on June 10 aimed at tight fiscal consolidation in a bid to convince the IMF to restart much-needed bailout payments.

Meanwhile, to appease the global lender, the government recently also announced a third hike in the prices of petroleum products in less than three weeks on June 15. The move came after the IMF emphasised upon the termination of energy subsidies to revive its bailout programme.