Pakistan facing tough task to impose hefty taxation as policy-level talks underway with IMF

ISLAMABAD – Cash-strapped Pakistan and the International Monetary Fund (IMF) are holding policy-level talks on the budget deficit, external financing, and other key issues, as the global lender keeps eye on untargeted subsidies.

IMF asked Pakistani officials to collect additional taxes to improve the tax-GDP ratio, linking the revival of the stalled program with policy reforms.

Reports in the media claimed that expenditures will be cut by Rs600 billion to limit the budget deficit. The development budget will be slashed by one-third. Earlier, the Washington-based lender and Pakistani government mulled views on technical talks.

The country of over 220 million is struggling to get the much-needed tranche of more than $1 billion as its exchange reserves plunged to critical levels, not enough to cover three weeks for imports.

As the government is trying its best to secure funding, the Human Rights Watch warned that stringent measures could worsen the social and economic plights of already distressed people.

The commission’s Asia director said millions have been pushed into poverty and denied their basic rights, urging the Sharif-led government and IMF to resolve the crisis without hurting low-income people.