IMF likely to demand pension reforms

ISLAMABAD: The International Monetary Fund (IMF) is likely to demand pension reforms from the next financial year under which the provision of pension might not remain feasible.

The IMF mission is likely to visit Pakistan in mid-May 2024 to finalise the salient features of the upcoming bailout package under the $6-$8 billion Extended Fund Facility (EFF) programme, reported The News.

The IMF team will stay in Islamabad for about two weeks to finalise the macroeconomic and fiscal framework for the next three to four years programme. The government is expected to present the next budget 2024-25 around June 6 or 7, 2024 before the parliament with the possibility of taking stringent measures aiming at achieving fiscal stabilisation.

The pension reforms might become one of the major demands of the IMF programme from the next financial year under which the provision of pension might not become feasible. There is another proposal under consideration to bring pensions under the tax net.

The FBR is considering bringing monthly pension of Rs100,000 under the tax net. There is another proposal to slap a flat rate of 10 percent on the taxable ceiling amounts of pensioners.

Pakistan’s foreign exchange reserves exceed $13 billion mark

The size of the next EFF programme will be finalised during the upcoming parleys between the two sides.

Pakistan is also expected to request the IMF for augmentation through climate finance as being done by Bangladesh to jack up its size of the IMF programme. Egypt’s programme size was also increased to $8 billion.

In the upcoming parleys, the IMF is all set to propose heavy taxation and massive curtailment of expenditure to achieve fiscal consolidation. The primary surplus has remained positive but the overall fiscal balance has been showing a worsening situation whereby the net revenue receipts were unable to meet debt servicing requirements, which proved to be the largest ticket item on the expenditure front.