Prime Minister Shehbaz Sharif on Thursday reaffirmed the resolve to expedite the process of institutional reforms on a priority basis.

The prime minister made the remarks while meeting a delegation of the International Monetary Fund (IMF) led by Jihad Azour, which called on him in Islamabad.

“Pakistan is heading towards economic growth, after attaining economic stability,” said the premier.

During the meeting, the discussions focused on the implementation of the ongoing IMF programme in Pakistan. The two sides expressed satisfaction over the economic reforms undertaken by the government and their positive outcomes.

The IMF delegation also expressed the resolve for continued support from the fund in Pakistan's efforts for economic stability and growth.

IMF wants duty on fertiliser doubled

The IMF has asked Pakistan to increase the Federal Excise Duty (FED) on fertiliser from 5% to 10% and impose a 5% tax on pesticides in the upcoming budget, The News reported.

However, PM Shehbaz, along with his team, is making efforts to avoid or reduce the proposed tax rates on major inputs of the farm sector.

On Wednesday, the IMF’s visiting Director for the Middle East, Azour, held a meeting with Minister for Finance Mohammad Aurangzeb here at the Ministry of Finance for finalising the upcoming budget.

Shehbaz is trying to convince the IMF to avoid this burden on farm inputs when the Agriculture Income Tax (AIT) will become operational from the next budget, with effect from July 1, 2025.

There are different estimates with regard to the AIT imposition, but in the short term, the provinces may generate Rs40 to 50 billion from farmers, but it’s premature to share any exact revenue projections.

“The revenues estimate for increased FED on fertilizer from 5 to 10 percent and slapping FED on pesticides at the rate of 5 percent is projected to fetch tax revenues of Rs30 to 40 billion from the pockets of farmers in the next fiscal year if the wish of the IMF is fulfilled,” top official sources confirmed while talking to The News.

Another proposal under consideration between the IMF and Pakistan authorities is to ensure equivalent taxation of all sources of income and introduction of a single turnover-based registration threshold for both income and GST registration to all businesses in the upcoming budget.