PAKISTAN RAISED THE TAXES TO SECURE IMF BAILOUT

The Pakistan government unveiled the budget for the fiscal year 2022-23 which starts in July 2022 with the objective to control the fiscal deficit and secure International Monetary Fund (IMF) bailout money.

Country Pakistan raised taxes on the rich, ban the import of cars and the buying of new vehicles by government officials. It was announced by Pakistan Finance Minister Mr.Miftah Ismail.

The country is facing a Balance of Payments (BoP) crisis and facing foreign reserves falling below $10 billion. It was not immediately clear if the ban related just to official vehicles or those for personal use.

This move came after the IMF had asked the South Asian country to address its elevated fiscal and current account deficits before releasing a bailout package.

The government would prevent tax evasion that would help increase revenue to 7 trillion Pakistani rupees ($34.65 billion) in 2022-23 and bring down the deficit. The government would target a fiscal deficit of 4.9% of gross domestic output for 2022-23, sharply lower from 8.6% in the current year. The Finance Ministry estimated the country’s inflation rate to average around 11.5% for the next financial year 2022-23.

   Important points for the exam:

• The Finance Ministry of Pakistan raised taxes on the rich and banned the import of cars and the buying of new vehicles by government officials.
• It was announced by the Finance Ministry of Pakistan with the objective to control the fiscal deficit and securing International Monetary Fund (IMF) bailout money.
• The country is facing a Balance of Payments (BoP) crisis and facing foreign reserves falling below $10 billion.
• This move came after the IMF had asked the South Asian country to address its elevated fiscal and current account deficits before releasing a bailout package.
• The Finance Ministry estimated the country’s inflation rate to average around 11.5% for the next financial year 2022-23.

   Facts to know:

• International Monetary Fund (IMF) was established in 1945.
• Headquarters of IMF: Washington, D.C., U.S.
• Managing Director of IMF: Ms. Kristalina Georgieva.
• First Deputy Managing Director of IMF: Ms. Gita Gopinath.