Pakistan likely to miss IMF's tax refund condition

Cash-strapped Pakistan is set to miss the International Monetary Fund's condition to refund Rs 75 billion to taxpayers in the first quarter despite an incentive by the global lender, a media report said on Friday.

The International Monetary Fund (IMF) had offered to soften the tough primary budget deficit reduction target if the country performs better in tax refunds.

Under the USD 6 billion IMF loan deal, Pakistan is required to reduce the primary budget deficit, calculated by excluding interest payments, to Rs 276 billion in the current fiscal year 2019-20 from last year's level of Rs 1.350 trillion, 'The Express Tribune' reported.

According to the IMF, the first quarter's primary budget deficit target is Rs 102 billion, which can be relaxed to an extent if the government pays more than Rs 75 billion in tax arrears.

Against the quarterly target of reducing the tax arrears by Rs 75 billion, Prime Minister Imran Khan-led government has so far cleared Rs 22 billion of the arrears, which are only 30 per cent of the targeted amount, according to figures released by the Federal Board of Revenue (FBR).

If the government released the remaining Rs 53 billion, it would adversely hit the challenging quarterly revenue target of Rs 1.071 trillion, also given by the IMF.

The FBR has set Rs 1.111 trillion target for the July-September quarter, the report said, quoting sources.