ISLAMABAD: Prime Minister Shehbaz Sharif is resisting the International Monetary Fund’s (IMF) diktat to increase tax on Pakistan’s salaried class and agricultural products in the upcoming federal budget, a government official confirmed recently, as the government prepares to release the annual document detailing Pakistan’s estimated revenues and expenditures for the upcoming fiscal year later this week.
Pakistan’s government is gearing up to present the budget for the fiscal year 2024-25 on June 12. The development takes place as the South Asian country remains locked in negotiations with the IMF for a fresh financial bailout program that Islamabad considers necessary to avert a macroeconomic crisis. Pakistan’s economic crisis has seen its reserves drop to alarmingly low levels and its currency significantly weaken against the US dollar over the last two years.
Islamabad has taken painful measures demanded by the IMF since 2022, which include hiking fuel and energy prices in return for the financial institution’s help. These decisions caused prices of essential commodities to skyrocket in the country, with inflation surging to 38 percent in May 2023 before dropping to a 30-month low of 11.8 percent in May 2024. 
“The prime minister is not ready to follow the IMF diktat to raise income tax on salaried class,” Rana Ihsan Afzal, the coordinator to the prime minister who is involved in the budget’s preparation process, told Arab News on Sunday.
“The IMF wants us to impose tax on agricultural products including tractors and even seeds but the prime minister has been resisting all this,” he said. Afzal added the government would initiate measures to ensure the agriculture and industrial sectors of the country flourish rather than impose additional taxes on them.
Afzal said the government would protect lifeline utilities consumers in the budget and increase the allocation for the Benazir Income Support Program (BISP), a federal unconditional cash transfer poverty reduction scheme.
“We are going to offer incentives to the industry to boost our exports and create job opportunities for the youth,” he said.
About the IMF’s proposal to levy a tax on pensions, he said the government was looking into different options to deal with the situation. He said the prime minister was mostly not in favor of the decision.
“We will be announcing an increase in pensions and salaries in the budget,” Afzal vowed, saying that the government was trying to present a “people-friendly” budget.
The Sunni Ittehad Council (SIC), a major opposition party backed by former prime minister Imran Khan’s candidates, said the government was “clueless” about the budget, claiming it would present a document that has been prepared by the IMF for parliament’s approval.
“The government has not consulted opposition parties about the budget’s preparation but we knew that this was going to be a tough budget for the public,” Zartaj Gul Wazir, an SIC lawmaker, told Arab News.
“As the opposition we will not only present our budget proposals in parliament but also force the government to review its anti-public measures,” she said. Wazir lamented that the economy had nosedived and the government did not have a cogent plan to revive it. 
Meanwhile, Afzal said the government would welcome the opposition’s budget proposals after it would table the finance bill in the National Assembly. 
“The opposition will be able to debate on the financial plan and forward its proposals to the government before the budget is passed,” Afzal said, adding that the government had consulted all other stakeholders, including those from various industries, for the budget’s presentation.