Headache for PM and finance minister as technical round end with IMF
IMF has asked for Do-more to increase sales tax on petrol and increase levy on diesel by Rs10 per litre
Shahbaz Sharif government is helpless in front of IMF, Finance Minister Ishaq Dar has gone to closed street, the punishment of increasing price of petrol, diesel, electricity and gas has been prepared for people.
IMF put ball in court of Prime Minister Shehbaz Sharif and Finance Minister Ishaq Dar for all difficult decisions.
Sales tax on petrol is likely to be introduced and levy is likely to be increased, petrol is likely to become more expensive on dictates of IMF. On dictation of IMF, levy on diesel is expected to be increased by another 10 rupees per liter and there is a demand for an immediate increase in levy.
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In four-day technical talks, IMF has expressed its concern over losses of government institutions and control of budget deficit has also been discussed.
Federal government has given a plan to reduce budget expenditure by about 611 billion rupees and subsidies will be reduced from 675 billion rupees to 335 billion which is present in budget document.
Discussions have also been held to bring a mini-budget in the four-day talks. IMF has called for an increase in sales tax rate from 17 to 18 percent, which is likely to raise Rs 37 to 42 billion more, but this increase could further fuel inflationary storm.
Abolition of concessional rate of sales tax in various sectors has also been considered and there is a fear that concessions of sales tax worth around 110 billion rupees will end in export sector.
Draft mini-budget has contemplated adding a significant provision to impose a flood levy and it is likely that government may impose an additional 3 percent flood levy or regulatory duty on imports of luxury items.
Implementation of IMF conditions has started and in first phase it has been decided to collect asset details of officers in grades 17 to 22.
Its purpose is to enable complete prevention of benami properties of public officials, the assets of public officials can be cleared from money laundering. In this regard, according to notification issued by Federal Board of Revenue, it will be mandatory to submit details of assets of officers and their families from grades 17 to 22. Asset details of officers from grade 17 to 22 can also be shared with concerned institutions.
Notification states complete details of bank accounts of officers and their families from grades 17 to 22 will be collected, all banks will be obliged to provide account details of government officials and their families to FBR. Banks will be required to provide details of government officials and their families twice a year.
Notification said that all banks will provide details to FBR on January 31 and July 31. State Bank will play the role of supervisor in sharing details of bank accounts. Banks will appoint focal persons to assist FBR. , all banks shall be bound to keep account details of government officials confidential, all banks shall also be bound to keep account details data of officials secure.
IMF has emphasized privatization of loss-making government institutions. There has been a demand to limit state intervention in economy through privatization.
IMF is also insisting on regular audit of government institutions. There has been a demand for ease of corruption, elimination of red tape, promotion of business and tax culture. There has been a demand for privatization of many institutions including LNG power plants, house building finance. Emphasis has been placed on reducing the losses of PIA, steel mills and other institutions.
In four-day talks, discussions were also held on removing the institutional flaws for economic development, investment, employment, emphasis was placed on providing equal opportunities and facilities to public and private institutions.
