The International Monetary Fund (IMF) mission is expected to visit Pakistan by late February or early March for the first review of the $7 billion Extended Fund Facility (EFF). Federal Minister for Finance Muhammad Aurangzeb stated no specific date had been confirmed.
According to the IMF’s October report, the first review under the EFF, along with the end-December 2024 performance criteria, is scheduled for March 15, 2025.Â
The successful completion of the first review and its approval by the IMF board will enable the release of the next loan tranche exceeding $1 billion. However, the review remains crucial for Islamabad, as it has yet to fulfill certain agreed conditions, including the agriculture income tax, tax collection from retailers, and the half-yearly Federal Board of Revenue (FBR) tax collection target.
Aurangzeb, while briefing the Senate Standing Committee on Finance and Revenue, chaired by Saleem Mandviwalla, said Pakistan remains committed to the programme’s targets. He noted that some measures may be incorporated into the 2025-26 budget, while others could be introduced later.
The finance minister reiterated the government’s plan to separate tax policy from the Federal Board of Revenue’s (FBR) operational functions in the next fiscal year. He said this move aims to improve efficiency by allowing the FBR to focus exclusively on tax collection.
Aurangzeb also addressed concerns about the tax burden on the salaried class, describing it as disproportionately high. He said the government is working to simplify the tax system and reduce this burden, noting that 60-70 percent of employees are not subject to the super tax.
The committee also discussed a proposal to introduce a carbon tax by converting certain existing levies. While Aurangzeb acknowledged the World Bank’s focus on climate and carbon taxation, Senator Farooq H Naik and others expressed concerns about its inflationary impact. The finance minister clarified that gas prices were raised to Rs3,500 for 1,100 Captive Power Plants out of 56,000 industrial units.
Finance Secretary Imdadullah Bosal informed the committee that no new Public Sector Development Programme (PSDP) budget is planned for 2025-26. However, five ongoing projects under the Finance Division will continue, with a proposed allocation of Rs3.1 billion.
