Pakistan has pledged to avoid tax amnesty schemes in the upcoming fiscal year (2024-25). This commitment reinforces their dedication to fiscal sustainability and debt reduction, as outlined in a letter of intent submitted to the International Monetary Fund (IMF).
Key Points:
- No Tax Amnesty: Pakistan will not offer tax amnesty programs in 2024-25, prioritizing long-term fiscal health over short-term gains.
- Fiscal Consolidation: The government aims to achieve a primary budget surplus (excluding grants) of PKR 401 billion (0.4% of GDP) in 2024 and further increase it to 1.0% of GDP in 2025. This strategy aims to manage debt vulnerabilities and control inflation.
- Revenue Mobilization: Pakistan plans to generate additional revenue through:
- Broadening the tax base, especially in undertaxed sectors.
- Implementing a new scheme to register and tax non-filing retailers and supply chain operators.
- Enhancing revenue collection processes.
- FBR Reforms: The government will finalize reform plans to modernize the Federal Board of Revenue (FBR) based on international best practices and digitalization initiatives.
- Budget Transparency: Efforts will be made to strengthen the budget process, prioritizing transparency and efficiency. This includes refraining from using supplementary grants, which can undermine fiscal discipline.
- Limited Guarantees: The government will limit guarantees issued to predetermined amounts.
Overall Significance:
Pakistan’s commitment to these measures reflects their resolve to build a sustainable and resilient economy. By prioritizing fiscal consolidation, revenue mobilization, and institutional reforms, the government aims to create a stable foundation for long-term growth and development.
Looking Ahead:
Successful implementation of these plans will depend on collaboration with international partners, domestic stakeholders, and fostering an environment that encourages investment while maintaining fiscal prudence and equitable economic opportunities for all citizens.
