Govt, IMF develop differences over no raise in govt employees salaries

Talks are underway between Pakistan and International Monetary Fund (IMF) in connection with preparations for new budget while Pakistan.

government employees salaries

Talks are underway between Pakistan and International Monetary Fund (IMF) in connection with preparations for new budget while Pakistan has requested IMF to soften its stance with regard to new fiscal year targets in the wake of coronavirus outbreak and locust attack and other problems.

IMF has supported non levying of any new tax in the budget for the financial year 2020-21 besides advising the government to maintain the taxes which have already been imposed. Additional taxes be not clamped owing to economic slowdown.

Sources said during the ongoing talks between the IMF and ministry of finance authorities, both the sides are engaged in exchanging views to rationalize tax targets.

IMF has proposed to set tax target of Rs 5100 billion for the next fiscal year of 2020-21 while government wants to set tax target Rs 4600 billion or 4700 billons. Government has made it clear if IMF proposed tax target of Rs 5100 billion is set then mini-budget will have to be introduced in December to achieve this target.

On the other hand ministry of finance authorities have said IMF program is safe till the month of September. There is possibility of difficulties to crop up in the economic review for 2020 because no improvement looks to come unless coronavirus is contained. The gas and electricity tariffs are likely to be scaled up following the containment of coronavirus epidemic.

IMF has stressed upon government to curtail unnecessary expenditures saying that government employees’ salaries be not raised.

Sources said the finance ministry authorities have expressed fear if salaries of government employees are not increased then government may face massive protest which will add to the woes of the government. Different organizations of the government employees have already announced to stage sit-in before parliament on June 12.

Read more: Pakistan’s inflation rate to decrease by 4.8 percent: IMF

Sources said the economic activities have been affected adversely in the aftermath of coronavirus, therefore, government is mulling over presenting tax free budget.

National Economy is feared to sustain loss to the tune of Rs 2600 billion in the aftermath of Coronavirus during the current fiscal year 2019-20.

The finance ministry authorities have said what loss has been suffered by national economy so far will make it difficult for government to prop up the economy in the next financial year, therefore, vital steps will have to be taken in the next budget to curtail the losses caused to national economy.

The exports have been affected adversely in the wake of coronavirus outbreak while federal board of revenue will have to face shortfall of Rs 900 billion.

According to sources it was disclosed during the meeting of economic experts under Abdul Hafiz Sheikh special assistant to Prime Minister (PM) that coronavirus has led to scale down the volume of national economy from 4.40 trillion to 4.15 trillion. GDP growth rate also remained minus 0.4 percent against set target of 3 percent during the current fiscal year.

As per finance ministry sources overall tax collection of FBR will remain Rs 3908 billon by the end of the current financial year. The next financial year tax collection target will be set keeping in view the tax collection of the current fiscal year. Indirect subsidies will be revoked next year.  The federal government will give approval to the grants on emergency basis.

Additional funds are being allocated in the next financial year budget to combat corona virus so that with increase in the health budget the upgradation of hospitals and provision of medical equipment is made sure.

Funds for extending financial assistance to the poor segments of society under Ahsas program is likely to be increased  in the next financial year.

Read more: Can IMF please provide the debt relief any quicker?

A comprehensive planning is being evolved to improve standard of life of the daily wage earners and labor class. An elaborate plan will be presented in the next cabinet meeting on this count and it will be made part of budget documents after it is approved.

Online Int’l News with additional input by GVS News Desk

blank