ISLAMABAD: The Finance Ministry has made no commitment with the International Monetary Fund (IMF) to take specific tax measures to curtail fiscal deficit, sources said.
However, the Finance Ministry has taken a number of initiatives to finance small and medium-sized enterprises (SME) in the country with an objective to promote this sector.
Sources at the Finance Ministry told Customs Today that the government had been engaged in talks with the IMF for review of extended fund facility program since September, 2013. In this regard, a review is carried out by both sides on quarterly basis.
However, the Finance Ministry made no commitment with IMF to enhance or decrease the tax ratio on any item, but it had been lowering and increasing the tax rates in lieu with domestic financial requirements or to bridge the revenue shortfall. Country faces revenue collection shortfall due to a number of reasons mainly lowering prices of petroleum products as well as increasing trade deficit.
The source said that Pakistan has entered in an arrangement with IMF under extended fund facility program since September, 2013. The agreement with the Fund is on the broader macroeconomic framework. Individual tax measures are decided by the Government of Pakistan, with a view to achieve the agreed macroeconomic targets.
The source added that Finance Ministry had taken a number of measures for the promotion of SME sector including issuance of revised Prudential Regulations (PRs) for SMEs, defining S and M segment for the first time, with the objective to focus on Small Enterprises. Introduction of targeted refinance schemes for SMEs e.g. financing for modernization of SMEs.
Introduction of Credit Guarantee Scheme for Small and Rural Enterprises, under which credit risk coverage of up to 40% is provided to the banks for extending loans to small and rural enterprises, which otherwise face challenges in accessing finance from the formal sector.
Similarly, the source named another measure of working on development of Secured Transaction Framework in the country with an objective to enable collateral deficient enterprises to offer movable assets as collateral for financing.
Arrangement of SME Cluster studies so that stakeholders especially banks better understand the sector and design appropriate financial products for the sector as well as institutional capacity building, training and development of banks’ staff in order to equip them with various aspects of SME financing.
