Budget 2024-25: How the budget is being tailored to appease IMF

With the International Monetary Fund (IMF) seeking visible improvements in revenue generation from Pakistan, the government has been forced to contemplate the potential impact of proposed measures on salaried individuals and crucial economic sectors, amid a dearth of fresh ideas about how to boost income. Discussions with Pakistani and IMF officials, as well as US-based economists, indicate that the two parties have reached ‘some’ understanding on raising the General Sales Tax (GST), removing existing tax exemptions and applying ‘zero rating’ only to exported items. In addition, there is agreement that discount rates will be aligned with market rates. The discount rate used in financial models, such as discounted cash flow (DCF) analysis, should reflect the market rate of return or the cost of capital.