Federal Board of Revenue’s (FBR) revenue shortfall during the first four months of the fiscal year, the International Monetary Fund (IMF) has asked Pakistan to implement additional revenue-generating measures.
Pakistan’s request to lower the FBR’s tax collection targets was also rejected by the IMF.
Express News cites FBR sources as saying that the IMF urged Pakistan to raise additional revenue in order to make up for the tax shortfall.
According to sources, the FBR requested a downward revision of its tax targets during virtual discussions with the IMF, but the request was turned down.
The disbursement of the second loan tranche may be affected by the FBR’s tax shortfall, and additional measures may be required if the shortfall persists in the coming months, according to sources.
Only two fiscal requirements are met by the government. On Thursday, the ministry made available the fiscal operations summary for the current fiscal year’s July-September quarter. It demonstrated Pakistan’s accomplishment of the IMF’s primary budget surplus and net revenue collection by the four provinces goals.
The major requirement for the federal government was a primary surplus of Rs198 billion, which exceeded Rs3 trillion, or 2.4% of GDP. The central bank fully booked the annual profit in the first quarter, which was primarily responsible for the higher surplus.
The entire estimated Rs2.5 trillion central bank profit from the first quarter has been accounted for, and it will level out in the coming months.
Punjab’s budget was in the red, with a Rs160 billion deficit in three months, according to the report. The remaining provinces all had cash surpluses.
By large margins, three conditions were not met: the four provinces had to generate a cash surplus of Rs342 billion; traders had to collect Rs10 billion; and the tax target of Rs2.652 trillion had to be met.
According to the Ministry of Finance’s report, Punjab’s expansionary fiscal policies prevented the provincial cash surplus from reaching its cumulative target of Rs342 billion.