Finance Minister Muhammad Aurangzeb on Saturday said the new $7 billion aid package deal reached between Pakistan and the International Monetary Fund (IMF) would help bring macroeconomic stability to the country.
Amendment by signing a ‘National Fiscal Pact’. Under the agreement, subjects including education spending, health, social protection, and regional public infrastructure investment will be devolved to provinces.
The provinces have already committed to “fully harmonising their Agriculture Income Tax regimes through legislative changes” with the federal and corporate income tax regimes. The move will be implemented from Jan 1, 2025.
The government will also improve the power sector’s viability and minimise its losses through timely tariff adjustment, reforms, and refraining from further unnecessary expansion of generation capacity.
“The authorities remain committed to undertaking targeted subsidy reforms and replace cross-subsidies to households with direct and targeted BISP support.”
The authorities will improve SOE operations and management as well as privatisation, in which the most profitable entities will be prioritised.
The government is also working towards “phasing out” incentives to Special Economic Zones, agricultural support prices and related subsidies, while refraining from new regulatory or tax-based incentives, or any guaranteed return “that could distort the investment landscape. “The authorities have also committed to advance anti-corruption as well as governance and transparency reforms, and gradually liberalise trade policy,” the statement concluded.
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