The International Monetary Fund (IMF) with the approval of fourth tranche worth $555.9 billion, has asked Pakistani government to broaden the tax base w.r.t to GDP. The efforts for safeguarding economic recovery are also needed.
Mr David Lipton, the First Deputy Managing Director and Acting Chairman of IMF has said that Macroeconomic conditions are improving due to steps taken by government for addressing short term macroeconomic vulnerabilities and advance structural reforms.
Fiscal consolidation remained on track, however, efforts for broadening the tax base and also increasing tax to GDP ratios are required. Elimination of tax concessions and exemptions will produce a fair and simpler tax system and improve tax climate.
Earlier on Friday the executive board approved fourth tranche of $555.9 million after completing third review of Pakistan’s economic performance under three year Extended Fund facility program. The board also approved the waiver on March performance and also adjustment in the end-June performance criterion on the net international reserves target and end-June fiscal deficit target.
The efforts for boosting foreign reserves are becoming successful including through spot purchases, greater exchange rate flexibility and prudent monetary policy. The policy interest rate should bring the inflation down over time. Revised legislation for empowering central bank in terms of improved policy framework with greater transparency in monetary policy decision making and enhanced central bank internal controls.
The banking sector remains stable and profitable. This stability will be further enhanced by ensuring compliance of few banks falling short for minimum capital adequacy requirements, also controlling non-performing loans (NPLs) and improving Anti money laundering and fighting terrorism.
Finance Ministry sources confirmed that Pakistan would receive fourth tranche worth of $555.9 million in the start of upcoming week. Pakistan’s foreign exchange reserves are currently at the level of $14.263 billion (SBP: $9.19 bn and Commercial Banks: $5.074 bn).