“The recent spike in both headline and core inflation in March and April is a cause for concern, and the SBP will use monetary policy tools to contain inflation, consistent with bringing it sustainably below 8 percent by the end of FY2014/15. In particular, the central bank will adjust the policy interest rate in a forward-looking fashion to maintain positive real interest rates and in line with desired inflation path”,
Meanwhile, the IMF has raised concerns about the recent appreciation of the nominal exchange rate and stressed that a more flexible exchange rate will help SBP to better reach its reserves objectives and boost competitiveness. However, the authorities do not share staff’s view that the exchange rate is somewhat overvalued, and place greater priority on the nominal exchange rate stability.
While appreciating government’s move to broaden the tax base, the IMF noted that more than 8,000 individuals have filed their taxes, as Federal Board of Revenue has issued more than 80,000 income tax notices to individuals with large apparent assets or income who have not filed tax returns. Moreover, the authorities are strengthening the database of potential taxpayers by incorporating additional sources of information-like urban property transactions and vehicle procurement. The authorities issued a tax directory of parliamentarians in February, and of all taxpayers at end-April. They also issued notices to all 45 parliamentarians that have not paid taxes.
The Fund noted that authorities met the indicative target on cash transfers under the Benazir Income Support Program (BISP), reaching 4.4 million beneficiaries. They are also on track to achieve the end-June, 2014 target. In FY2014/15, the authorities will increase cash transfers to the vulnerable through the authorities will increase cash transfers to the vulnerable through the BISP by 25 percent to address poverty and inequality concerns and protect the most vulnerable from the impact of the energy price adjustments, inflation and fiscal consolidation. Coverage of the BISP will also increase by an additional 10 percent in FY2014/15. After the significant payments made by the government to reduce arrears in
The measures include the following components: The stock of arrears at the PSHCL in the STCF facility stood at around
Outside the PSHCL, payables in the power sector reached around
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