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ISLAMABAD: Technical level talks between International Monetary Fund (IMF) team and Pakistani authorities have been extended for two more days on power sector with the fund demanding withdrawal of power subsidy to the export-oriented sector and additional taxes.

Sources said that technical level talks with the Fund continued on Sunday and will continue today on power sector, one of the major challenging areas. They added that the Fund is demanding additional tax measures including increase of one percent in the standard rate of sales tax to bridge the revenue shortfall. However, they added that any decision would depend on the revenue gap to be determined during the policy level talks.

We have prepared various proposals and measures to be taken would be decided after knowing the revenue gap. Completion of 9th review is vital for Pakistan at this point in time to ensure external inflows according to these sources.

IMF wants up to Rs7.50/unit power tariff raise

When asked about power sector, a source said that the IMF has been pressing for withdrawal of power subsidy of Rs100 billion provided to the export-oriented sector and want full recovery of Rs952 billion power sector’s gap through increase in power tariff. However, the government side has been trying to explain to the IMF team that it would be difficult to settle the entire amount. When asked how much power subsidy was provided to the export sector, sources said Rs50 billion has been disbursed. “Power sector remained a major challenge during the technical-level talks” they added.

The second phase of policy-level talks would start from tomorrow and will continue till February 9 on the Memorandum of Economic and Financial Policies (MEFP).

On the fiscal side, the sources confirmed that a one-off flood levy was on the table that is estimated to field around Rs 180 billion. They did not rule out a major cut in the public sector development program (PSDP) to curtail the fiscal deficit. The cost of debt servicing consequent to recent devaluation has increased to Rs 5.2 trillion, which means that fiscal deficit would be over seven percent they added.

Copyright Business Recorder, 2023


Comments are closed.

Awami Feb 06, 2023 08:21am
It duty of politicians ( Ruling and opposition ) to come together and address nation. They need to tell together that these are essential hard decisions for economic survival and understand situation. These are dangerous times so need painful decisions for survival and progress. Even our neighbor had to send all gold of reserve bank to IMF. They went through painful decisions, reformed and were able to save themselves. Both Govt party and opposition unhappy but agreed. This case is no different. Exceptional times need brave decisions.
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Abid Feb 06, 2023 09:36am
All benefits of govt. officials, politicians, high rank Judges and generals should be reduced rather than making life of general public miserable.
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Sultan Feb 06, 2023 09:55am
Meeting IMF conditions will have adverse effects on poor people. Why can’t they raise revenues by taxing the pensions, taxing the Agriculture incomes, taxing the industries run by Army Welfare, limiting the ministers in cabinet, free allowances to higher ups etc. Poor people are already facing extreme difficulties in surviving
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Dr fahad Feb 06, 2023 11:55am
That's very welcoming . There should be not be any kind of subsidy culture
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Nadeem Malik Feb 06, 2023 02:20pm
I wish the IMF team listens to the voice of the Pakistani people. Bring pak army under tax net. Bring all public office holders especially the judges under ‘no subsidy’ class. Scrap the policy of free utilities especially power and gas to public office holders. Moreover, IMF should be adamant to a point that pak army personnel and and their families to declare their assets inland and abroad. Catch the Generals, bureaucrats & Judges present and past. They are the real crooks.
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Mian M N Shaite Feb 06, 2023 05:01pm
Daughter and Samdhi should initiate another round of "karz utaro mulk sanwaro". Hundi guys will facilitate the final scavenging of the carcass (of Pk) that remains.
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Haq Feb 06, 2023 05:09pm
Privatize the entire govt. & handover to people of Pakistan, let these corrupt ruling elite escape to their foreign masters / safe heavens, where they hid all the looted wealth / accounts, properties / palaces, businesses, kids / families (e g. Island in Australia, Papa Jones chain in US, Even field Apt, Surrey Palace in UK)
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Adnan Feb 08, 2023 05:02pm
@Awami, opposition supporters remember clearly how after current govt left country at default status in 2018 & through Covid 19 , all PDM did was try to derail govt & stop any good moves by PTI. Now everyone wants opposition to be quiet because Sharifs & Bhuttos are in power? No sir I would rather see country die than these 2 families in power.
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