On the seventh review of the International Monetary Fund’s (IMF) program for Pakistan, the negotiations between Pakistan and the international financial institution would begin after a new government is established in the country now suffering through what is considered by many as a political crisis.
the IMF will continue to help Pakistan because there is no intention of suspending IMF projects.
“The Fund seeks to continue its support to Pakistan,” Esther Perez Ruiz, the IMF’s Resident Representative for Pakistan, Once a new government is established, we will engage on measures to enhance macroeconomic stability and ask about intentions vis-a-vis program involvement.” There is no concept of suspension within IMF programs.”
“Finance Division and IMF remain engaged in data sharing and reform discussions as part of EFF,” the Finance Ministry tweeted in reaction to media reports that the IMF has paused talks for Pakistan’s seventh review program. There is no validity to the rumors’ that the program would be suspended. The IMF has verified this, as well as reiterating its commitment to Pakistan’s macroeconomic stability.”
“We are totally dedicated to supporting the development initiatives of the Government of Pakistan that are sponsored by the World Bank, for the benefit of the people of Pakistan,” a World Bank representative said. We will continue to work with the World Bank on project planning and implementation for Pakistan’s portfolio, as planned, and in close collaboration with the authorities.”
It’s worth noting that the IMF advocated a 5% income tax for persons earning between Rs. 50,000 and Rs. 62,500 per month. The government now levies a tax on income up to Rs. 100,000 per month.
The IMF advocated a ten percent income tax rate for those with a monthly income of up to Rs. 79,000. At the moment, the government only applies this rate on people who earn Rs. 150,000 per month.
According to sources, the IMF proposed imposing a 20% income tax on monthly incomes below Rs. 104,000. People earning roughly Rs. 417,000 are presently subject to a 20% tax rate.
According to the sources, the IMF’s most harsh suggestion was to impose a single 30 percent tax rate on those with a monthly income of more than Rs. 104,000 but less than Rs. 1 million.
Those earning up to Rs. 4.17 million per month are currently subject to a 30% tax rate.
The IMF advocated a 35 percent income tax on anybody earning more than Rs. 1 million per month. A 35 percent tax is now paid on income tax groups earning more than Rs. 7.25 million each month.
The IMF also demanded that pensions be taxed, either at the time of contribution or at the time of withdrawal. Despite these disputes, it appears that the IMF did not end its relations with Pakistan and instead stated that it intended to continue to help the country.