Govt mulls measures to improve revenues, end rupee volatility ahead of IMF meet.

ISLAMABAD -- The government is grappling with the issue of collecting additional revenues to make up for declining tax collections amid the slowing national economy so that the International Monetary Fund (IMF) could be brought to the table for the completion of the 9th review under the ongoing extended fund facility (EFF) and ensure foreign exchange inflows from other multilateral lenders as well.

Finance Minister Ishaq Dar on Monday had separate meetings with State Bank of Pakistan (SBP) Governor Jameel Ahmad to discuss matters relating to the exchange rateand higher-than-targeted profit from the central bank and provincial governments to remove irritants to harmonisation of general sales tax (GST) on a national level.

The meeting between the finance minister and SBP governor is also believed to have discussed matters relating to the manipulation of exchange rates by banks in recent months and the way forward on punitive actions and course corrections.

During Mr Dar's meeting, the provincial chief secretaries agreed with consensus over the harmonisation of GST throughout the country that would clear hurdles towards $1.4bn foreign inflows including about $500 million to Sindh and the remaining $900m to the federal government. Ultimately, the $500m loan to Sindh would also benefit the federal government in the shape of foreign exchange as provincial governments are given equivalent local currency.

Reaches consensus on sales tax harmonisation, wants SBP to boost its profits

Informed sources said the discussions with the IMF staff were originally planned for the last week of October and then scheduled to begin on Nov 3. However, these could not take off as planned owing to large revenue and expenditure slippages and no new dates have been finalised so far.

Among other things, the expenditure gap has widened because of over Rs100bn additional subsidy to export sectors on top of budget allocations and agriculture support. Revenues have also slowed down, missing the collection target in October as imports dropped.

These sources said the finance minister expected the federal government's profit from the SBP to increase to about Rs371bn against Rs300bn targeted in the budget. Likewise, the government had already approved an increase in petroleum development levy on high-octane blending component (HOBC) by Rs20 per litre and was also expected to control subsidy allocations for Utility Stores Corporation.

These are some of the measures that could...

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