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In recent negotiations between Pakistan and the International Monetary Fund (IMF) to secure the final tranche of $1.1 billion under a standby arrangement, significant progress has been reported. The talks have yielded key commitments from Pakistan aimed at addressing economic challenges and fostering sustainable growth. Here are the notable developments and commitments:
The discussions between Pakistan and the IMF have advanced, with both sides poised to reach a staff-level agreement early next week. This marks a crucial step forward in securing the final tranche of financial assistance.
Electricity and Gas Tariffs
Pakistan has committed to implementing timely increases in electricity and gas tariffs. Starting from July 1, further hikes in electricity tariffs are expected, accompanied by measures for monthly, quarterly, and annual adjustments to facilitate cost recovery.
Abolishment of Tax Exemptions
A significant emphasis has been placed on the abolition of tax exemptions to bolster tax revenue. Pakistan plans to phase out the current annual tax exemption amounting to Rs2.239 trillion gradually. Additionally, there will be no issuance of new tax exemptions or amnesty schemes in the upcoming budget, except for exemptions for foreign diplomatic missions and non-profit charitable organizations.
The IMF has underscored the importance of continuing economic reforms to maintain stability. This includes maintaining a tight monetary policy and adhering to a market-based exchange rate policy.
Protection of Beneficiaries
The IMF has emphasized the significance of safeguarding recipients of the Benazir Income Support Programme (BISP). The government has committed to increasing the number of beneficiaries by June.
The progress in economic review talks between Pakistan and the IMF reflects a concerted effort to address economic challenges and promote sustainable growth. Upon successful completion of negotiations, Pakistan will receive the final installment of financial assistance after approval by the IMF's Executive Board. These developments signify Pakistan's commitment to implementing crucial reforms and ensuring economic stability in the country.