The International Monetary Fund (IMF) has refuted claims of urging Pakistan to raise taxes on salaries and business income or increase the maximum threshold for petroleum levy. Contrary to media reports, there are no current plans for such measures, as stated by Esther Perez Ruiz, the IMF’s resident representative in Pakistan.
The nation, operating under a caretaker government, averted a sovereign debt default with a $3 billion standby arrangement (SBA) approved in July. The IMF disbursed $1.2 billion as the first tranche, addressing Pakistan’s acute balance of payment crisis, historically high inflation, and unprecedented currency devaluation.
The bailout deal mandated Pakistan to generate $1.34 billion in new taxation for fiscal adjustments, contributing to an all-time high inflation rate of 38% year-on-year in May. Despite the challenges, the IMF remains pivotal in stabilizing Pakistan’s economy, which faced diminished foreign exchange reserves and a three-week capacity for controlled imports.
The caretaker government continues to navigate economic challenges, dispelling rumors of proposed tax changes by the IMF. The situation underscores the importance of international financial support in addressing economic vulnerabilities and sustaining stability in the face of significant fiscal pressures.
