Shafaqna Pakistan: Economic institutions have presented a model budget framework containing a series of recommendations for the upcoming federal budget, along with proposals aimed at addressing Pakistan’s fiscal and economic challenges.
According to the report, the government of Pakistan has assured the International Monetary Fund (IMF) that it will adhere to the strict conditions required for the approval of the next budget.
The proposed model budget recommends granting tax exemptions on the repatriation of foreign assets, suggesting that the measure could help attract investments worth up to $20 billion.
The report also proposes providing overseas Pakistanis with an incentive of Rs10 per dollar on remittances sent through formal banking channels rather than informal money transfer systems. According to the recommendations, such incentives could substantially boost remittance inflows into the country.
It further states that strengthening the rupee to Rs250 against the US dollar could help reduce inflation by up to six per cent.
According to the report, a one-percentage-point reduction in the policy rate could save the government approximately Rs625 billion in debt servicing costs.
The analysis warns that budget deficit levels could reach 4.4 per cent of gross domestic product (GDP) under existing IMF-linked policies.
However, the report argues that locally driven reforms could lower the fiscal deficit to 2.1 per cent of GDP.
The model budget also recommends tax incentives for the information technology sector, saying they could significantly boost exports.
It stresses the need to broaden the tax base by bringing agriculture into the tax net and notes that reducing losses in the energy sector is essential for controlling the budget deficit.
The report further highlights privatisation of state-owned enterprises as a key step towards reducing the burden on public finances and calls for the removal of regulatory barriers to encourage greater private-sector investment.
Source: Dunya News
