PKR 30 bn taxes to be imposed to save Pakistan State Oil from default: Report
Aug 01, 2022
Islamabad [Pakistan], August 1 : Pakistan has decided to impose additional taxes totalling Pakistan Rs (PKR) 30 billion as it struggles to arrange PRK 100bn in emergency funds to prevent an international default on oil and gas payments and sustain its staff-level agreement with the International Monetary Fund (IMF), according to the local media reports.
The decision was taken at a special meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Finance Minister Miftah Ismail on Sunday. The meeting was informed that more taxes will be necessary in order to fulfill the financial promise made to the IMF for a PKR 153 billion primary budget surplus, reported Dawn.
The ECC directed the Finance Division and Federal Board of Revenue to submit a proposal for generation of Rs30 billion through taxes within a week", Dawn quoted citing the announcement after the meeting.
It also approved a supplementary budget grant of Rs30bn for immediate payment to state-run Pakistan State Oil (PSO) facing international payment obligations of about PKR 270bn till August 28.
"For the smooth continuity of the oil and gas national supply chain and to avoid PSO from being default on international payments, the ECC decided to clear the outstanding payments accumulated during the period of the previous government," the announcement said. It also directed the Power Division to make immediate payments of the current outstanding amount of PKR 20 bn within 24 hours and another PKR 12.8bn by August 4 (Thursday).
Notably, PSO must make a $267 billion foreign payment during the first two weeks of August 2022. The expected collections for the first two weeks of August came in at Rs 157 billion, leaving a net shortfall of Rs 100 billion.
The IMF and Pakistan reached a staff-level agreement on Wednesday on the combined seventh and eighth reviews for a USD 6 billion Extended Fund Facility (EFF) loan facility.
Pakistan hoped that this agreement would stabilize the country's economy and depreciate its currency. IMF also hoped that it would bring down high inflation and end Pakistan's political instability.
