ISLAMABAD: Pakistan has reached a $7 billion staff-level agreement with the International Monetary Fund (IMF).
According to an IMF statement, the Executive Board of the IMF will provide final approval for the 37-month programme.
The statement detailed that under the new agreement, Pakistan will receive $7 billion over the next 37 months. The program aims to enhance fiscal and monetary policies, expand the tax base, and provide an expansionary fund facility, all in line with the economic stability measures outlined in the 2023 Standby Arrangement.
Over the past year, Pakistan has seen a decrease in inflation and an improvement in foreign exchange reserves, promoting economic stability. The new loan program is expected to further this stability.
To achieve economic stability, Pakistan will need to increase tax revenue. The share of taxes in the Gross Domestic Product (GDP) is set to rise by three percent during the loan program, with an expansion of the tax net in the retail sector.
The IMF declaration emphasized the necessity for joint economic efforts between the federal government and the provinces. The fair distribution of expenses under the 18th Amendment will be reviewed, with increased spending on education, public health, and public infrastructure in the provinces. To boost revenue, provinces will need to increase sales and agricultural taxes.
By January 1, 2025, the Federation and the provinces are expected to enact necessary legislation related to individual and corporate income taxes.
The IMF statement also highlighted the importance of support from international partners to help Pakistan achieve these goals.
