ISLAMABAD:- The talks between Pakistan and the International Monetary Fund (IMF) has been stalled until the formation of the new government as the Fund indicated to resume engagements with new government.

Sources said that the talks on 7th review meeting started from 4 March 2022 has been suspended after desolving the PTI government.

The negociations between Fund and Pakistan were scheduled to end March 15٫ 2022 but it was lingeron due to differences on critical issues including changes in Income tax slabes٫ PM relief package٫ tax amnesty scheme for industerial٫  privatization of some Gencons and Discos and other issues.

According to the sources that Pakistan team led by Finance Minister Shaukat Tarin could not convince IMF staff on two important issues, which are PM Relief Package and tax amnesty scheme.

The PTI government had not agreed to increase tax rates of the income tax.

The IMF had proposed five percent income tax for people earning in the range of Rs 50,000 to Rs 62,500 per month. Currently٫ the government is charging this tle rate for income up to Rs 100,000 per month.

For the income group having monthly income of up to Rs79,000, the IMF had proposed 10% income tax rate. Currently٫ the govt is charging this rate to only those who earn Rs150,000 a month.

The IMF had come up with the proposal to slap 20% income tax on the monthly income below Rs 104,000, according to the sources. The 20% tax rate is currently charged from the people earning nearly Rs417,000.

The IMF’s most aggressive proposal was to slap a single tax rate of 30 percent on people having monthly income above Rs 104,000 to Rs 1 million, said the sources.

Currently, the 30% tax rate is collected from those who earn up to Rs 4.17 million a month.

For people earning over Rs1 million a month, the IMF had proposed 35% income tax. Currently٫ 35 percent tax levied on the income tax group٫ earns over Rs 7.25 million per month.

The IMF was also insisting that pensions should be taxed, either at the contribution stage or at the withdrawal stage.

Despite these differences٫  it looks that IMF did not windup the engagements with Pakistan and said that it wants to look to continue its support to Pakistan.

When the scribe contacted with Esther Perez Ruiz٫ the Resident Representative of the IMF for Pakistan said that “Fund looks to continue its support to Pakistan and, once a new government is formed, we will engage on policies to promote macroeconomic stability, and enquire about intentions vis-a-vis program engagement”.

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