Friday, May 28, 2010

IMF insisting on Pakistan government to implement Value Added Tax

On May 28, 2010, Paul Ross, Country Representative, IMF said that by implementing Value Added Tax, Pakistan government could become self-sufficient. Mr. Ross was providing a lecture on Regional Economic Outlook survey for Middle East and Central Asia by IMF.

IMF and World Bank are now insisting on Pakistan to introduce VAT in the country.

Mr. Ross said that in order to become less dependent on foreign aids it is very much important that the government of Pakistan increase its revenue collection and invest those money in the private sector.

Mr. Ross added that inflation and availability of credit to private sector are the biggest challenges for the government of Pakistan. By declining the rate of inflation, the government would be able to reduce poverty.

Paul Ross said that Pakistan government should draw policy that focuses on economic growth along with ensuring political stabilization in the country.

IMF projected Consumer Price Inflation (CPI) at 11.8% for Pakistan in 2010 which would decline to 6.3% in 2011.

The IMF released a $1.13 billion loan to Pakistan after its latest review of the country’s economic performance. The loan was due by the end of March but it was delayed due to disagreements over implementing VAT and raising the price of electricity between Pakistan government and IMF.

According to the condition, Pakistan government was supposed to increase power tariff by 6% within April 1, 2010. Government of Pakistan assured the IMF that they are committed to achieve their goal.

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