Government devises plan to end impasse, restart IMF program
Business
Political instability is significant roadblock to decision-making as circular debt tops Rs4 trillion
ISLAMABAD (Dunya News) - Top government decision-makers have developed a plan to end the impasse and restart the International Monetary Fund (IMF) program.
The whole cost of electricity would now be passed on to customers at Rs7.50 per unit and gas prices will increase by 50–60 percent. The prime minister will also need to impose new taxes totaling Rs300–400 billion through higher indirect tax rates and withholding tax rates.
Senior government sources have claimed that top policymakers are becoming increasingly frustrated as they detail the approach, the accompanying expenses and its ramifications in the event that the IMF prescriptions are not implemented because the cost of adjustment would rise with each passing day.
The present administration is seeking assurances that they would maintain their performance in the upcoming months due to worries that they could be ousted for making difficult decisions that resulted in higher utility costs and higher taxes.
Because the current administration is unsure of what will happen if it pays the price of political capital by making difficult decisions under the IMF program and then the country advances towards the next general elections, political instability has proven to be a significant roadblock to decision-making.
The circular debt monster has topped Rs4 trillion forcing the government to raise power bills by Rs7.30 per unit.
In the mini-budget, Islamabad has been requested to levy an extra tax of Rs400 billion which would be more than the additional tax of Rs250 billion imposed by the government in the annual budget.
Government can raise between Rs175-200 billion in the remaining months of the current fiscal year if further initiatives totaling Rs400 billion are taken. According to sources the only way to implement new tax measures is to raise the rates of withholding tax and indirect taxes.
Sources said that it might be suggested to acquire an extra Rs60 billion from the flood levy at a rate between one and three percent.
