No more tax amenities, exemptions: 10 structural benchmarks set for SBA

ISLAMABAD: The International Monetary Fund (IMF) has set 10 structural benchmarks (SBs) for stand-by arrangement (SBA) including not granting further tax amenities as well as avoiding the practice of issuing new preferential tax treatments or exemptions.

The Fund in its latest country report on Pakistan stated that programme performance will be monitored through quantitative performance criteria (QPCs), indicative targets (ITs), SBs and quarterly reviews, including the regular assessment of financing commitments to ensure the program remains fully financed.

The Fund had set two prior actions including (1) Parliamentary approval of a fiscal year 2024 budget in line with IMF staff agreement to meet program targets, (2) Withdrawal of the circular on prioritization in providing FX for certain types of imports introduced in December 2022, with the purpose of ensuring full market determination of the exchange rate. Both prior actions were met, the report noted.

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The report noted three SBs on fiscal including (1) commit to not grant further tax amnesties (continuous), (2) avoid the practice of issuing new preferential tax treatments or exemptions (continuous), (3) issuance by the Central Monitoring Unit (CMU) of its first periodic report on the performance of SOEs, using latest available data, to the federal government (end-December 2023).

On social sector, the Fund has sect one SB including inflation adjustment of the unconditional cash transfer (Kafaalat) (end-January 2024).

On monetary and financial sector, the IMF has set two SBs (1) average premium between the interbank and open market rate will be no more than 1.25 percent during any consecutive business day period (continuous), (2) submission to parliament of amendments to align Pakistan’s early intervention, bank resolution, and crisis management arrangements with international good practices, in line with IMF staff recommendations (end-December 2023).

The Fund has set two SBs on the energy sector and state-owned enterprises (notification of the annual rebasing (AR) for the fiscal year 2024 to take effect on July 1, 2023 (end-July 2023), (2) improve state-owned enterprise (SOE) governance by: (i) operationalising the recently-approved SOE law into a policy that clarifies ownership arrangements and the division of roles within the federal governments; and (ii) amending the Acts of four selected SOEs to make the new SOE lawfully applicable to those SOEs (end-November 2023).

Copyright Business Recorder, 2023