Representatives from the International Monetary Fund (IMF) have concluded a series of meetings in Islamabad, engaging with key Pakistani institutions including the Federal Board of Revenue (FBR) and the Supreme Court Bar Association (SCBA). These discussions are part of the IMF’s ongoing Governance and Diagnostic Assessment (GCDA) mission, which aims to evaluate and enhance governance structures across various sectors in Pakistan.
The IMF teams are focusing on several critical areas, including fiscal policy, tax policy, anti-corruption measures, procurement processes, audits, and anti-money laundering efforts. Their visit involves examining the governance frameworks within relevant ministries and identifying areas for potential improvement.
FBR Briefs IMF on Tax Transformation Plan
A significant portion of the IMF’s engagement has been with the FBR, where technical teams received a briefing on Pakistan’s indigenous tax transformation plan. This plan, approved by the Prime Minister last year, is designed to address the substantial tax gap, estimated by the FBR to exceed Rs7 trillion.
The FBR’s strategy places a strong emphasis on digitalization and implementing robust enforcement measures to narrow this gap and improve actual tax collection. Key aspects of the plan include transforming tax offices into model tax offices (MTOs) and streamlining enforcement and intelligence directorates to combat issues like smuggling.
Officials from the FBR provided initial details of the plan to the IMF technical team, with further briefings expected. The FBR also outlined planned measures aimed at reforming its governance structure to boost tax collection in the upcoming year. A notable objective of the plan is to reduce the amount of physical currency in circulation to levels comparable to regional peers. Strategies discussed to enhance documentation include disallowing input tax on sales to unregistered entities and utilizing digital invoicing to track unregistered buyers. Stricter penalties for non-compliance are also being considered.
Judicial Efficiency and Rule of Law Discussed with SCBA
Separately, an IMF delegation met with representatives of the Supreme Court Bar Association (SCBA), including the presidents of the Balochistan and Sindh High Court Bar Associations. The discussions centered on crucial issues such as judicial efficiency, the enforcement of contracts, and the protection of property rights.
Both sides acknowledged the fundamental link between economic and political stability, good governance, and the rule of law. The SCBA President, Mian Mohammad Rauf Atta, highlighted the importance of judicial efficiency for a robust and independent judiciary. He informed the IMF mission about ongoing efforts on both judicial and legislative fronts to enhance efficiency.
On the judicial side, initiatives by the Chief Justice of Pakistan were highlighted, including the introduction of an e-filing system, improvements to case management, expedited disposal of pending cases, and the implementation of video link facilities in the Supreme Court. Legislatively, the recently introduced 26th Constitutional Amendment was noted for its aim to improve judicial independence and overall system effectiveness.
Further initiatives discussed to enhance judicial efficiency included increasing the number of expert judges, establishing specialized tribunals for matters like tax disputes, and creating forums for Alternate Dispute Resolution (ADR) to ensure effective justice delivery at the local level.
Regarding contract enforcement, the SCBA acknowledged procedural delays but emphasized government efforts to create a favorable environment for foreign investment, including the introduction of special courts and benches to adjudicate such matters. The constitutional protection of property rights under articles 23 and 24 was also mentioned, along with ongoing efforts to strengthen anti-encroachment laws and enforcement mechanisms.
The IMF mission is expected to share a questionnaire with the SCBA seeking detailed responses, proposals, and suggestions on the discussed matters as the GCDA process continues.
