ISLAMABAD - International Monetary Fund (IMF) has asked Pakistan to reform taxation and control line losses in the power sector to stabilise the economic situation of the country.
Sources said IMF officials were of the view that majority of the economic targets set for the current fiscal year were challenging and the government might not achieve them.
Sources further said IMF officials were not happy with the subsidy given to the power sector for the ongoing financial year 2012-2013. The officials were of the view that this amount could go up to Rs 230 billion against the government target of Rs 185 billion for the fiscal year to be ended on June 30, 2013. They further asked the government to control the line losses of the power sector instead of giving subsidy which could result in an out of control budget deficit.
Meanwhile, sources added, the IMF team asked the government to accelerate process of bringing reform in the taxation system that would help increase the resources. The fund asked the government to achieve the revenue collection target of Rs 2,381 billion set for the ongoing financial year which, according to the IMF team, seemed a difficult task to accomplish.
The Federal Board of Revenue (FBR) officials briefed the Fund that the government was all set to take additional steps for generation of Rs 200 billion in the remaining period of the current fiscal year.
IMF officials also asked the government to reduce expenditure for achieving fiscal discipline. Sources said the IMF team was displeased with financial year 2011-2012 budget deficit figures. Pakistan’s fiscal deficit remained at Rs 1,366 billion or 6.6 per cent of the GDP in the last financial year 2011-2012 against the target of Rs 924 billion or 5 per cent of the GDP.
The IMF delegation was led by Jeff Franks. The two sides held meetings as part of Post Programme Monitoring. Pakistan and IMF also discussed the macroeconomic framework for the ongoing financial year 2012-2013.