Pakistan secured a $3 billion accord with the International Monetary Fund (IMF) last month, and Finance Minister Ishaq Dar emphasized on Friday that there would be no additional taxes on the agricultural and construction industries.
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Today, while addressing the National Assembly, Dar recalled reading in “about a dozen newspapers” that IMF-imposed “strict conditions” would result in the imposition of news taxes on the agriculture and construction industries.
Continuing, he clarified, “I am categorically stating that no new taxes will be imposed on agriculture, construction, or real estate.”
His statement comes more than a week after the IMF’s Executive Board approved a $3 billion stand-by agreement (SBA), which was secured on June 30 and provided Pakistan with some relief from default risks.
The long-awaited staff agreement was signed days after the government made adjustments to the fiscal budget for the following year, including Rs215bn in additional taxes and Rs85bn in expenditure cuts.
Today, elaborating on the “rumors,” Dar stated that the nation had “suffered [enough] pain” in order to secure the IMF program, which he had secured.
Dar referred to the rumors as the “result of an extremely grave misunderstanding” and stated that approximately a dozen publications had reported them.
He added that the reports had sparked “a wave of concern among the agricultural community in rural areas,” who feared what new tax measures would be implemented.
The minister recalled his farewell address when he declared changes to the fiscal year (FY) 2024 budget, adding that the government has already “taken prior actions” — implying that no additional actions will be taken.
Dar pledged that neither the real estate nor agricultural sectors would be subjected to a single penny of additional taxation.
The minister requested that three documents related to the IMF pact be preserved in the library of the National Assembly so that they would be accessible to all lawmakers.
Dar explained that the documents included a June 30 letter of intent, a memorandum of economic and financial policies, and a technical memorandum of understanding.
Dar stated that the aforementioned documents will be accessible on the website of the finance ministry by midnight tonight.
He thanked all involved officials for their hard work and dedication in concluding the process of signing the IMF agreement, as well as the opposition for its participation.
The minister went on to clarify why the government signed a new agreement rather than completing the IMF’s ninth review, which ended on 30 June.
Dar stated that if the ninth review had been extended, “no further extension of this programme would have been possible,” and while the country would have secured $1.1 billion, the $1.4 billion due in the tenth and eleventh IMF reviews would have been lost.
Consequently, he added, the government “tried to ensure that the $1.4 billion is not lost” and that the money is received through a new program.
The minister added that the government’s goal was to obtain a pact with the IMF for $3.5 billion instead of $2.5 billion, but the two parties eventually settled on $3 billion.
Dar explained that the agreement was extended over nine months, rather than the slightly longer period suggested by the lender, so that the incoming government would be able to make a “independent decision” regarding the way forward.
The minister also recalled the $2 billion and $1 billion remittances received from Saudi Arabia and the United Arab Emirates, respectively, earlier this month.
In addition, Dar argued that, as a result of the government’s policies, the “inflationary storm” should subside.
In two years, according to estimates from the State Bank of Pakistan, consumer inflation was projected to decline to seven percent.
The minister continued by expressing support for a “charter of economy” and stating that “we should all strive to put politics aside.”
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