PM Sharif Vows to Accelerate Economic Reforms

Islamabad: Prime Minister Shehbaz Sharif emphasized his determination to expedite institutional and macroeconomic reforms during a meeting on Thursday.

The Prime Minister made these comments during a meeting with a delegation from the International Monetary Fund (IMF), led by Jihad Azour, in Islamabad.

“Following economic stabilization, Pakistan is progressing towards economic expansion,” the Prime Minister stated.

Discussions during the meeting centered on the execution of the existing IMF program in Pakistan. Both parties voiced contentment with the economic adjustments implemented by the government and their encouraging results.

The IMF delegation also affirmed its commitment to ongoing assistance for Pakistan’s endeavors in achieving economic stability and growth.

Reportedly, the IMF has proposed that Pakistan raise the Federal Excise Duty (FED) on fertilizer from 5% to 10% and introduce a 5% tax on pesticides in the upcoming fiscal budget.

Nevertheless, PM Shehbaz and his team are striving to avert or lower the suggested tax rates on essential agricultural inputs.

On Wednesday, the IMF’s Director for the Middle East, Azour, convened with Finance Minister Mohammad Aurangzeb at the Finance Ministry to finalize the forthcoming budget.

Shehbaz is endeavoring to persuade the IMF to forgo this burden on farm inputs, given that the Agriculture Income Tax (AIT) will be operational starting from July 1, 2025.

While estimates concerning the AIT imposition vary, provinces may initially generate between Rs40 to 50 billion from farmers. However, it is too early to provide precise revenue forecasts.

Official sources confirmed that increasing the FED on fertilizer from 5% to 10% and imposing a 5% FED on pesticides is projected to yield tax revenues of Rs30 to 40 billion from farmers in the upcoming fiscal year if the IMF’s proposal is approved.

Another proposal under deliberation between the IMF and Pakistani authorities involves ensuring uniform taxation across all income sources and implementing a unified turnover-based registration threshold for both income and GST registration for all businesses in the next budget.