Prime Minister Shehbaz Sharif on Thursday reiterated his steadfast commitment to accelerating institutional and macroeconomic reforms.
The Prime Minister made these remarks during a meeting in Islamabad with a delegation from the International Monetary Fund (IMF), led by Jihad Azour.
“Pakistan is moving towards economic growth, having achieved economic stability,” the premier stated.
During the meeting, discussions primarily focused on the implementation of the ongoing IMF program in Pakistan. Both sides expressed satisfaction with the economic reforms undertaken by the government and their positive outcomes.
The IMF delegation also affirmed the Fund’s resolve for continued support in Pakistan’s efforts towards economic stability and growth.
According to a report by The News, the IMF has requested Pakistan to increase the Federal Excise Duty (FED) on fertilizer from 5% to 10% and to impose a 5% tax on pesticides in the upcoming budget.
However, Prime Minister Shehbaz, along with his team, is actively striving to avoid or reduce these proposed tax rates on essential agricultural inputs.
On Wednesday, Jihad Azour, the visiting IMF Director for the Middle East, held a meeting with Minister for Finance Mohammad Aurangzeb at the Ministry of Finance to finalize the upcoming budget.
Shehbaz is attempting to persuade the IMF to forgo imposing this burden on farm inputs, especially as the Agriculture Income Tax (AIT) is set to become operational from the next budget, effective July 1, 2025.
While there are varying estimates regarding AIT imposition, in the short term, provinces may generate Rs40 to 50 billion from farmers. However, precise revenue projections are premature at this stage.
“The revenue estimate for an increased FED on fertilizer from 5 to 10 percent and slapping FED on pesticides at the rate of 5 percent is projected to fetch tax revenues of Rs30 to 40 billion from the pockets of farmers in the next fiscal year if the wish of the IMF is fulfilled,” top official sources confirmed while speaking to The News.
Another proposal under consideration between the IMF and Pakistani authorities is to ensure equivalent taxation of all sources of income and to introduce a single turnover-based registration threshold for both income and GST registration for all businesses in the upcoming budget.
Pakistan to Benefit from World Bank’s Development Investment
Subsequently, in a separate meeting with a World Bank delegation led by Managing Director of Operations Anna Bjerde, Prime Minister Shehbaz commended the Bank’s crucial role as a significant development partner in Pakistan’s progress.
He stated that his government is taking practical steps to maximize benefits from the World Bank’s development investments.
He expressed hope that the World Bank’s Country Partnership Framework (CPF) would bring over $20 billion in development investment to Pakistan.
The Prime Minister also expressed appreciation for the World Bank’s assistance to the victims of the 2022 floods in Pakistan, which severely impacted millions of people, destroying livelihoods and properties.
In her remarks, World Bank Managing Director Anna Bjerde conveyed the Bank’s strong value for its historic partnership with the Government of Pakistan for the development and prosperity of its people.
She also extended special gratitude to PM Shehbaz for his effective role in strengthening the partnership and implementing the Country Partnership Program.
Also commending Pakistan’s recent exemplary economic performance and stability, she stated that through its positive actions for macroeconomic stability, Pakistan had achieved what seemed impossible.
She expressed that the World Bank looks forward to continued cooperation to achieve the positive outcomes of the Country Partnership Framework.
The Managing Director observed that the Prime Minister’s leadership, his commitment to the uplift of the Pakistani people, policy continuity for sustainable and inclusive growth, and efforts to engage all stakeholders at the political level, make Pakistan a model for the World Bank’s partnership framework in other countries.
She revealed that due to the Prime Minister’s excellent and effective leadership, the Country Partnership Framework is being globally referred to as the “Pakistan Model.”
She expressed hope that PM Shehbaz’s focus on practical actions would lead this partnership framework to success.
