Islamabad:
Pakistan informed the International Monetary Fund (IMF) on Friday that it will not be able to achieve this quarter RS3.1 trillion tax targets, but hoped to recover the deficit through inflation, economic growth and higher imports of solar panels.
In a briefing to the IMF delegation, the tax authorities said the July-September goal would be missed by a significant margin. At a separate meeting, the power department assessed the lender about the development in the electricity sector, especially the settlement of RS1.25 trillion circular debt through bank loans.
The negotiations take place for the release of a loan tant of $ 1 billion under the extended fund facility (EFF) and another $ 220 million under Resilience and Sustainability Facility (RSF).
During the meeting with the Federal Board of Revenue (FBR), the IMF asked about revenue projections and the effects of flooding on collection this financial year. The government has set RS14.13 trillion annual targets, which can also miss like last year when FBR fell briefly with over RS1.2 trillion.
Against the July-September target of RS3.08 trillion, FBR said the IMF collection can remain under RS2.95 trillion, sources said. The government hoped to recover the deficit from November when financial activities picked up.
Similar hopes were made last fiscal year, but remained unfulfilled.
Although a separate session on macroeconomic projections is due next week, the tax authorities see that the economy is growing over 3% this financial year despite flooding. They also projected inflation that was collected due to flood -related supply disorders, sources said. These two factors may offset some income losses.
The Customs Department informed the IMF of the consequences of the reduction in regulatory tasks. It said the import catalog collection rose 16% over the first two months. Officials hoped that contingency measures would not be necessary to offset customs reduction.
Imports rose 9% in dollars and in double digits in rupee terms, offsetting breeder.
The IMF was told that RS190 billion projected through enforcement measures will be paid by an annual return. The government hopes that 10% tax on sales in previous FATA will also increase the collection.
FBR also had to settle back from an immature suggestion to add estimated fair value in tax returns.
After Faux Pas, Prime Minister Shehbaz Sharif formed a committee that chaired the law minister Senator Azam Nazeer Tarar to investigate the new column of Iris self -declarations requiring filers to declare the estimated legal value of assets, assess implications and recommend corrective measures.
The committee met on September 26. After considerations, it recommended to remove the column in the interest in simplifying filing. The recommendation was submitted and approved by the Prime Minister.
FBR had claimed that the column was solely for data collection in support of the financial investigation, not income or tax liability. But the claim did not hold the earth.
The tax authorities hoped that increased imports of the solar panel would offset deficits. The IMF had budgeted RS18 billion income from 10% tax on solar imports. In the first two months, around RS6 billion was already collected, sources said.
However, FBR feared a dip in tax collection through electricity bills due to the falling demand from the National Grid. Demand for the web is falling due to higher prices, slowdowns and policies pushed by the IMF, the World Bank and the Ministry of Energy.
Meanwhile, Minister of Power Sardar Awais Ahmed Khan Leghari said that the current structure of solar measurement remains a critical challenge for sustainable reforms. He has repeatedly indicated net measurement in his current form constitutes financial imbalance affecting the wider consumer base.
The Power Division said that about 350,000 solar measuring consumers benefit from favorable repurchase prices, with costs indirectly carried by 35 million other consumers.
Inscardful energy prices have forced consumers to switch to solar energy, and the government is struggling to lure them back when distribution companies are facing falling demand for housing.
The power department also informed the IMF of progress in settling circular debt through borrowing, reducing line loss and improving the bill of the bill. But concerns remain about sustainability.
It said the government has already saved RS175 billion due to falling interest rates and another RS242 billion by reducing theft and technical losses.
Counsel for PM on privatization, Muhammad Ali, said HBL chairman Sultan Allana provided full support on behalf of the banks to raise RS1.25 trillion debt to clearing fees by power producers.
“This journey started with our meeting with HBL’s chairman, who assured us for full support in national interest,” Ali said. He added that although banks originally wanted a smaller number, they eventually agreed with the rationale, supported by the Minister of Finance and the State Banking.
The IMF was told that RS1.225 trillion syndicated loans were arranged with the participation of 18 banks. Repayment will be made by a dedicated supplement that is already embedded in bills that guarantee predictability for lenders and minimize fiscal burden.
The facility relates to RS1.225 trillion circular debt through structured Islamic funding of Bai Muajjal, Ijara -Financing and Liquid Sukuk bonds in the stock market.
The financing is secured with a rate 0.9% below, which applies to Karachi Interbank offered rates (kibor) for a maximum of six years. Repayment is made by charging RS3.23 on each unit consumed by paying customers.
According to the event, the debt is cleared in less than six years, with RS350 billion savings being transferred to consumers. The deal also saves RS377 billion in late payment, reduces circular debt that bears costs by 1.5% and operates financing costs by 1.5% annually.
“The prime minister’s vision was for the consumer to be the winner of this exercise,” a special assistant to the prime minister said.
