The resident of the International Monetary Fund (IMF) in Pakistan Mahir Binisi has added the existing economic challenges of Pakistan due to the debt burden of Islamabad, which is an inability to generate revenue until capacity.
“There is a high burden of taxation on the formal sector,” the IMF officer said at a conference on “Retail Remaginated: Innovat, Cooperation and Thrive”, “the IMF official said.
Binissi further said that a large fiscal burden originated mainly because there are some areas that are not contributing to the national treasury.
His comment comes as a review mission by the Washington -based lender, in the first week of March, it is set to visit Pakistan to hold a review Parle under the $ 7 billion Expenditure Fund Facility (EFF).
The smooth sailing of the first review of the IMF sponsored program is considered quite important, as Islamabad will have to seek a discount on the incompleteness of some conditions.
The government headed by Prime Minister Shahbaz Sharif approved the IMF Executive Board for the fresh loan program in September 2024, after which the $ 1.02 billion installment was recited.
Along with IMF officials in Pakistan, Islamabad will also have to develop widespread consensus on the major figure of the next budget for 2025-26 with the lender employees.
If both sides fail to develop consensus, the first review can be combined with the budget approval from Parliament.
The IMF Review Mission is expected to visit Islamabad from 4 March when the current account has changed from the surplus to a month-by-month (MOM), as it posted a $ 420 million deficit in January 2025.
Speaking on the government’s commitment to stabilize economic indicators, Federal Finance Minister Muhammad Aurangzeb had earlier stated that the retail field in the country’s GDP was 19%, but his contribution to tax was just 1%.
He said that in retail, tobacco and beverages, formal versus was an element of informal areas, where formal people were subsidizing free riders. Such a free ride is unstable.
“Salary, manufacturing and some extent to pay more taxes in the areas of services, but it could not move forward. The ratio of the salaried class burden has increased and I knew because I had paid income tax as a salaried person last September.
Addressing the inaugural session of the conference, the Finance Minister said, “It is not sustainable. Now agriculture, retail/bulk and real estate will have to take steps to travel on this trajectory.”
Finmined further commented that the enforcement would be largely against informal sectors and those un-docks that would contribute nothing to the national treasury.
