Economics & Business

IMF warns Pakistan to enforce tax reforms or lose much-needed funds

The International Monetary Fund (IMF) has categorically warned the Pakistan Government to enforce the controversial Reformed General Sales Tax (RGST), or the financial crisis-hit country will not get any funds. Reliable sources have confirmed the recent IMF statements saying that if Pakistan does not enforce the RGST, it will surely lose the funds it needs, news reports revealed.

IMF officials have also asked the government to continue its reforms in the energy sector, as the government is still providing subsidies that is further burdening the exchequer. The organization will send its mission to Pakistan only after witnessing concrete progress on the RGST and the abolishing of power and POL subsidies, so the revival of the Fund programme depends upon taking revenue measures and pursuing reforms.

“If the government takes a prompt action, it could pave the way for reviving the derailed $11.3 billion programme and Islamabad would be able to draw the last two tranches of $3.4 billion till September 2011 under the ongoing Standby Arrangement (SBA) programme,” the officials said.

The IMF has also linked the visit of a full-fledged mission with the Pakistan government’s other revenue mobilization measures- including raising excise duty on selected items, narrowing the gap between revenues and expenditures- and coming up with a feasible financial plan to control the deficit without fueling inflation.

Although top government officials are trying to convince IMF’s senior officials to postpone RGST enforcement until the next financial year, the IMF is seemingly sticking to its stand, insisting that the government must deliver on the tax reforms front. -ANI

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Haroon Akram Gill

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