IMF stresses need for broadening tax base

September 28, 2024 (MLN): The Executive Directors of the International Monetary Fund (IMF) welcomed government's steps taken toward a fairer tax system and stressed the importance of additional revenue mobilization efforts by broadening the tax base and enhancing tax administration.

The global lender made these remarks in a detailed report released after approving Pakistan’s request for a $7 billion, 37-month Extended Fund Facility (EFF).

Alongside prudent spending management, this will create space for essential investments in human capital, infrastructure, and social protection.

Directors also called for reforms to strengthen the fiscal framework, including federal-provincial institutional arrangements; measures to ensure the energy sector’s lasting sustainability, including through cost-based tariffs; and enhanced liquidity and debt management.

IMF urged steadfast execution of the planned continued consolidation in the FY25 Budget and underscored the need for sustained gradual consolidation, underpinned by strengthening of fiscal institutions, to durably improve debt sustainability.

In this regard, some Directors noted that given the ambitious growth projections, "there is no room for policy slippages without undermining debt sustainability."

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