ISLAMABAD, Feb 19: The government has cut its revenue collection target by Rs16 billion with the approval of the International Monetary (IMF).

The third time revised target now stands at Rs414 billion for 2001-2002 due to continued negative effects of the Sept 11 events.

“IMF has agreed to new Rs414 billion target due to various factors including Central Board of Revenue’s paying considerable rebates to exporters, reduction in imports and depreciation of dollar viz-a-viz rupee,” said Mr Henri Ghesquiere, Senior Resident Representative of the IMF in Islamabad.

He told Dawn here on Tuesday that reduction in revenue collection was understandable specially due to September 11 events. However, he expressed hopes that CBR would make efforts to achieve its new target.

The good thing, Mr Henri pointed out, was the satisfactory review of the Pakistani economy by the IMF mission which, he said, will hopefully lead to the disbursement of roughly 108 million dollar second tranche out of 1.3 billion dollar poverty reduction growth facility (PRGF) in March or early April this year.

Nevertheless informed sources said that CBR was not likely to achieve its new revenue target due to weak administration and non implementation of the report of the Shahid Hussain Committee, which had extensively proposed restructuring of the organization aimed at removing leakages and improving revenue collection.

The sources said that during the first two months (July-Aug) of the current financial year, there was no growth in the revenue that kept forcing the government to continue revising downward its revenue collection target.

The sources said that fundamental reforms of the CBR will be critical to achieve the targeted medium term fiscal consolidation and tax policy measures to widen further tax base. Both the IMF and the World Bank were urging the government to aim for tax revenue to increase by 1.5 percentage points of GDP over three years to 14.3 per cent in 2003-04. There had been discussion on tax policy between the IMF review mission and the senior officials of the ministry of finance, and time-table for further strengthening general sales tax regime and elimination of tax exemptions and other measures to rationalise the tax system was worked out.

The IMF believed that reforming the CBR will be one of the cornerstones of the structural reform agenda of the PRGF supported programme, and that several key measures will be implemented during the current financial year. These include the organizational restructuring of the CBR and the recently established large tax payer unit in Karachi.