The Federal Board of Revenue has submitted a comprehensive plan to the International Monetary Fund to address the revenue shortfalls, sources said on Tuesday.
In September, the IMF’s Executive Board approved a new $7 billion, 37-month loan agreement for Pakistan that requires “sound policies and reforms” to strengthen macroeconomic stability. The approval released an immediate $1 billion disbursement to Islamabad.
The crisis-wracked South Asian country has had 22 previous IMF bailout programs since 1958.
Sources added that key initiatives in the plan include the clearance of containers at ports, auctioning of smuggled goods, and enhancements to enforcement capabilities.
Progress on such measures would be prioritised ahead of the upcoming visit from the IMF delegation.
The FBR has targeted a tax collection of approximately Rs960 billion. Due to an existing revenue shortfall of Rs385 billion, the overall tax target for January has been adjusted to Rs1,340 billion.
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Last year, the Fund urged Pakistan to end state intervention in the economy and enhance competition, which would help foster the development of a dynamic private sector.
In the “constructive discussion”, the two sides agreed on the need to continue prudent fiscal and monetary policies, and revenue mobilisation from untapped tax bases, while transferring greater social and development responsibilities to provinces.
In a TV address to the nation on November 17, Finance Minister Muhammad Aurangzeb said: “We are going to be very firm on compliance and enforcement because as a country our hand has been forced. We cannot continue to go back to the same for more, whether it is salaried class or manufacturing sector.”
When former FBR chairman Shabbar Zaidi appeared on the Aaj News show News Insight with Amir Zia, he said the FBR missing Rs100 billion or Rs120 billion in meeting the quarterly tax collection target should not be taken negatively, saying that the Rs13,000 billion target is huge.
“I think, FBR’s performance on this quarter is not bad,” he said and added that “target” was a wrong word because such an amount would not improve the country’s economy. “Pakistan will have to collect worth Rs26,000 tax for improvement.”
