ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have initiated policy-level discussions for the release of a $1 billion loan tranche under the ongoing economic program.
Key topics include the National Finance Commission (NFC) and agricultural income tax, with officials highlighting a revenue potential of Rs300 billion from agricultural taxation. A special session on circular debt management is also scheduled, where Pakistan has proposed a Rs1,250 billion reduction and plans to borrow the same amount from banks at a 10.8% interest rate. To facilitate loan repayment, a surcharge of Rs2.8 per unit on electricity consumers is being considered.
The negotiations will feature a dedicated session with the National Electric Power Regulatory Authority (NEPRA), where Pakistan will update the IMF on power tariff implementations. Discussions will also cover the distribution of revenue between the federal government and provinces under the NFC framework.
Meanwhile, the federal government has abandoned plans for a mini-budget for FY 2024-25, opting instead for an alternative approach to address a Rs605 billion shortfall. A key aspect involves resolving tax-related cases in courts, with the Supreme Court set to hold a crucial hearing on March 10.
Prime Minister Shehbaz Sharif has assured full cooperation, while Chief Justice Yahya Afridi has approved an expedited hearing process. The IMF has been briefed on the strategy as Pakistan seeks to meet fiscal targets and secure the next tranche of funding.
