IMF approves Pakistan's budget, signals economic progress

The International Monetary Fund (IMF) has given its nod of approval to Pakistan's proposed budget for the upcoming financial year. This budget includes the removal of tax exemptions totaling nearly Rs3.8 trillion, a move that aligns with the IMF's requirements. This step indicates progress towards the approval of a new bailout program for Pakistan. The Federal Board of Revenue (FBR) has ramped up its enforcement efforts to expand the tax base, in line with IMF directives.

The government's adherence to the IMF's demands is anticipated to result in a staff-level agreement with the IMF this month. To meet IMF conditions, income tax for the salaried class has been raised to international standards. Additionally, the government plans to leverage technology to combat tax evasion, as per the IMF's instructions.

Moreover, the government aims to decrease power subsidies, ensuring that consumers bear the full cost of production. State-owned power companies are slated for privatization in the upcoming financial year, a significant move towards deregulating the power sector. The privatization of government-run entities will be expedited to boost efficiency and competitiveness.

The IMF's approval of Pakistan's budget proposal marks a crucial step towards stabilizing the country's economy. By aligning with IMF requirements and implementing measures to enhance tax collection and privatize state-owned enterprises, Pakistan is moving towards financial sustainability and economic growth.