World Bank asks Pakistan to adopt National Fiscal Policy

Islamabad: Amid the staggering economic crisis in Pakistan, the World Bank has asked Islamabad to adopt a national fiscal policy by aligning federal and provincial spending with constitutional mandates, merge various federal and provincial revenue agencies into a single general sales tax (GST) collection agency, and effectively tax agriculture, capital gains and real estate in the next fiscal year’s budget, Dawn reported on Monday.

“Implement the new Fiscal Responsibility and Debt Limitation Acts (FDRLA) at the federal and provincial levels, including through development and implementation of a national medium-term fiscal framework through the FY25 budget process,” the World Bank asked the government in its latest policy advice.

This is now expected to be made part of the next International Monetary Fund programme that Pakistan Finance Minister Muhammad Aurangzeb will be discussing with the lender next week in Washington on the sidelines of World Bank-IMF spring meetings, Dawn reported.

The bank demanded tangible progress on GST harmonisation across the federation and its federating units, “including through rollout of the GST portal” and move towards “rate harmonisation to facilitate tax compliance and the provision of input tax credits”.

On top of this, the World Bank also suggested “consolidation of all GST collection responsibilities with a single agency, which could then distribute revenues in accordance with constitutional provisions” to reduce administrative complexity.

At present, GST is collected by the Federal Board of Revenue, mostly on goods and some services, while similar revenue boards are operating in provinces to collect GST on some services. However, given the overlapping nature of certain services, the stakeholders have been facing GST collection adjustments among the provinces. (IANS)

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