The International Monetary Fund (IMF) has asked the government not to continue subsidies on petroleum products and to ensure timely adjustments in energy prices in order to avoid fiscal strain.
Sources divulged on Tuesday that the initial virtual consultations between Pakistan and the IMF are under way to set key targets for the forthcoming budget. The IMF maintained that prompt adjustment in energy and fuel prices is essential to prevent financial pressure, adding that recommendations of regulatory authorities concerning electricity tariffs should be implemented without delay.
The IMF has advised the government to act on proposals put forward by regulatory bodies relating to energy and electricity pricing, and has also suggested a reduction in tax exemptions, concessions and relief measures in the new budget.
Proposals under consideration for the forthcoming budget include broadening the tax net and further curtailing expenditure. A recommendation has also been made to increase the tax-to-GDP ratio by at least one per cent annually.
Moreover, the directions have additionally been issued to ensure measures aimed at reducing the burden of public debt.
– IMF proposes curbs on sovereign wealth fund –
Meanwhile, the IMF has recommended a series of restrictions on the sovereign wealth fund (SWF).
The IMF has called on Pakistan to impose stringent conditions to render the SWF fully operational. Under these terms, the fund shall not, in any circumstances, be permitted to borrow or obtain loans. The provision of loan guarantees or the pledging of assets by the SWF would be prohibited, while lending to public or private entities or individuals would also be barred.
Likewise, the fund would be restrained from acquiring financial assets and from securing any form of investment or support from financial institutions or state-owned enterprises.
