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IMF: Pakistan ready for tax reforms

WASHINGTON: Pakistan supports a general sales tax and changes to its energy industry, the International Monetary Fund said on Saturday while reporting on its talks with the country.

The IMF and Pakistan also have agreed on a budget deficit target for the 2011 financial year to help flood victims and reduce inflation, said a statement issued by the IMF headquarters in Washington.

Adnan Mazarei, the leader of an IMF staff mission which held a series of meetings in Islamabad this week, praised the country’s efforts to stabilise its economy.

Pakistani “authorities consider that the reformed general sales tax is essential to raise revenue to finance relief for flood victims, poverty reduction, and infrastructure reconstruction,” Mr Mazarei said. “Tax reform is also needed to make the tax system more equitable.”

Mr Mazarei noted that Pakistani authorities recognised the critical importance of energy sector changes and had initiated reforms aimed at reducing loadshedding.

Pakistani officials had agreed to “curtail energy subsidies in order to free up budget resources for spending in priority areas; and resolving the issue of circular debt,” he said.

“Progress has been made regarding the measures to be implemented in the context of the authorities’ economic stabilisation and reform agenda, while protecting the poor,” Mr Mazarei said.

“The IMF remains committed to the ongoing dialogue with the Pakistani authorities, and discussions will continue, including around the Pakistan Development Forum, to support Pakistan’s efforts to strengthen macroeconomic stability.”a

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