Low imports, inflation hit revenue collection

With falling imports and a sharp deceleration in inflation, the government is urged to renegotiate targets of macroeconomic indicators with the International Monetary Fund (IMF) to lower the tax burden on the salaried class and corporate sector and boost economic activity. The IMF team will visit Islamabad next month to conduct the first economic review under the 37-month $7 billion Extended Fund Facility (EFF). All key indicators need serious revisions since inflation, large-scale manufacturing, and imports have changed significantly due to dropping global commodity prices. Background discussions with economists and statistics imply that when interest rates decline, it also redu­ces the government’s debt servicing burden. According to the source, the State Bank of Pakistan is poised for a fourth straight cut in its policy rate early next month amid anticipation of 200 basis points, with the full impact noticeable in the third and fourth quarters.