# *Detailed SUMMARY of the article "The cost of relief" by Editorial, Published in Dawn on June 2nd, 2025:* The editorial discusses the *federal government*'s struggle to provide *tax relief* to *middle-class salaried individuals* and *businesses*, particularly the *real estate lobby*, in the upcoming budget while being bound by *IMF's stern conditions*. The government's desire for relief measures has intensified following *Pakistan*'s recent *tactical military win against India*, as the *ruling party* hopes to convert the resulting *'feel-good factor'* into broader *political support*. The central question raised is whether the government can secure *'concessions'* from the *multilateral lender* to implement its *'relief plans'* aimed at winning over *middle-class voters*. The government was forced to *delay the budget announcement* by more than a week to *June 10* after the *IMF mission* left the country following *inconclusive policy discussions* on *Islamabad*'s budget proposals. No *final agreement* was reached due to disagreements primarily on the proposed *increase in defence expenditure* and *tax cuts* for individuals and businesses. The *Fund* later stated that discussions would continue *virtually* regarding the budget *"over the coming days"*, indicating ongoing disagreement. The *IMF* emphasized that talks *"focused on actions to enhance revenue — including by bolstering compliance and expanding the tax base — and prioritise expenditure"*. The outcome of ongoing *virtual budget talks* remains *inconclusive*, as evidenced by the lack of announcements from either the *Fund* or the government about resolving differences. The *IMF* is concerned that the government's *expenditure* and *tax relief proposals* will undermine the agreed-upon *primary budget surplus target* of *1.6% of GDP*, whose size determines the *reduction or increase in public debt* in a given fiscal year. The lender demands *credible proposals* identifying *alternative sources of revenue* to offset the impact of increased *defence* and other expenditures and *tax cuts*. The *IMF*'s concerns are justified by the *widening shortfall* of more than *Rs1 trillion* in *tax collection* during the first *11 months* of the current fiscal year, despite the imposition of *record new taxes* and the *blocking of tax refunds*. This massive shortfall indicates that the *Federal Board of Revenue (FBR)* may fail to meet even the *revised collection target*. The *IMF* had recently agreed to *slash the tax collection target* of nearly *Rs13 trillion* by *Rs640 billion* for the full fiscal year. With the *Fund* insisting on fortifying the *primary budget surplus target* against additional expenditures and potential *revenue slippages*, the nation's *fiscal authorities* face a formidable challenge in balancing *IMF programme goals* with the government's growing desire to deepen the *feel-good factor* through *fiscal extravagance*. # *Easy/Short SUMMARY*: The *Pakistani government* wants to provide *tax relief* to *middle-class* and *businesses* in the upcoming budget to capitalize on the *'feel-good factor'* from a recent *military win against India*. However, *IMF's stern conditions* create obstacles as the *budget announcement* was *delayed to June 10* due to *inconclusive policy discussions*. The *IMF* opposes proposed *defence spending increases* and *tax cuts* that threaten the *1.6% GDP primary budget surplus target*. With a *Rs1 trillion tax collection shortfall* in *11 months* despite *record new taxes*, the *FBR* struggles to meet targets. The *IMF* demands *alternative revenue sources* while the government seeks *fiscal extravagance* to maintain political support. # *SOLUTIONS of The Problem*: ## *1. Enhance Tax Compliance* Strengthen *FBR's enforcement mechanisms* and *digitize tax collection* to improve *compliance rates* and reduce *tax evasion*. ## *2. Expand Tax Base* Bring *untaxed sectors* into the *tax net* and reduce reliance on *salaried class* for revenue generation. ## *3. Alternative Revenue Sources* Identify *non-tax revenue streams* like *privatization proceeds*, *asset sales*, and *user charges* to offset *tax relief*. ## *4. Prioritize Essential Expenditure* Review and *rationalize government spending* by cutting *non-essential expenditures* while maintaining *defence* and *development* priorities. ## *5. Targeted Relief Measures* Provide *selective tax relief* to specific *income brackets* and *sectors* rather than *blanket reductions*. ## *6. Strengthen Revenue Administration* Invest in *technology* and *human resources* for *tax administration* to improve *collection efficiency*. ## *7. Negotiate Flexible IMF Terms* Engage in *diplomatic negotiations* with *IMF* for *flexible implementation* of *fiscal targets* considering political realities. ## *8. Boost Economic Growth* Focus on *growth-oriented policies* that naturally increase *tax revenues* without raising *tax rates*. ## *9. Reform Real Estate Taxation* Implement *comprehensive real estate tax reforms* to capture *actual property values* and increase revenue. ## *10. Medium-term Fiscal Strategy* Develop a *multi-year fiscal plan* that balances *IMF requirements* with *political sustainability* and *economic growth*. # *IMPORTANT Facts and Figures Given in the article*: - *Budget announcement* delayed by more than a week to *June 10*. - *Primary budget surplus target* of *1.6% of GDP* agreed with *IMF*. - *Tax collection shortfall* of more than *Rs1 trillion* in first *11 months*. - *IMF* agreed to *slash tax collection target* by *Rs640 billion* from nearly *Rs13 trillion*. - Government imposed *record new taxes* and *blocked tax refunds*. - *IMF mission* left after *inconclusive policy discussions*. - Disagreements on *defence expenditure increase* and *tax cuts*. # *IMPORTANT Facts and Figures out of the article*: - *Pakistan*'s *total debt* stands at *Rs78 trillion* as of *March 2025* (*State Bank of Pakistan*). - *Tax-to-GDP ratio* in *Pakistan* is *8.6%* compared to *15%* regional average (*World Bank*, 2024). - *Defence budget* accounts for *3.5%* of *GDP* in *Pakistan* (*SIPRI*, 2024). - *IMF programme* worth *$3 billion* approved in *July 2023* (*IMF*, 2024). - *Inflation rate* in *Pakistan* averaged *28.3%* in *fiscal year 2024* (*Pakistan Bureau of Statistics*). - *Current account deficit* reduced to *$1.2 billion* in *2024* from *$17.4 billion* in *2023* (*State Bank*). # *MCQs from the Article*: ### 1. *By how much was the budget announcement delayed?* A. Few days *B. More than a week* C. Two weeks D. One month ### 2. *What is the agreed primary budget surplus target with IMF?* A. 1.2% of GDP *B. 1.6% of GDP* C. 2.0% of GDP D. 2.5% of GDP ### 3. *What is the tax collection shortfall in the first 11 months?* A. Rs500 billion *B. More than Rs1 trillion* C. Rs750 billion D. Rs1.5 trillion ### 4. *By how much did IMF agree to slash the tax collection target?* A. Rs500 billion *B. Rs640 billion* C. Rs800 billion D. Rs1 trillion ### 5. *What recent event contributed to the government's confidence?* A. Economic recovery *B. Tactical military win against India* C. IMF approval D. International recognition # *VOCABULARY*: 1. *Relief* (راحت) – Assistance or help in difficult situations 2. *Stern* (سخت) – Strict and demanding 3. *Tactical* (حکمت عملی) – Relating to strategy or planned actions 4. *Concessions* (رعایت) – Things granted or yielded 5. *Multilateral* (کثیر الاطراف) – Involving multiple parties 6. *Compelled* (مجبور) – Forced to do something 7. *Inconclusive* (غیر حتمی) – Not leading to a definite result 8. *Bolstering* (تقویت) – Strengthening or supporting 9. *Overarching* (بالا دست) – Comprehensive or overall 10. *Surplus* (اضافی) – Excess amount 11. *Credible* (قابل اعتماد) – Believable and reliable 12. *Offset* (متوازن کرنا) – Counterbalance or compensate 13. *Apprehensions* (خدشات) – Anxiety or fear about future 14. *Shortfall* (کمی) – Deficiency or shortage 15. *Slashing* (کاٹنا) – Drastically reducing 16. *Fortifying* (مضبوط بنانا) – Strengthening or reinforcing 17. *Slippages* (کمی) – Failure to maintain levels 18. *Formidable* (مشکل) – Inspiring fear through size or difficulty 19. *Extravagance* (اسراف) – Excessive spending 20. *Fiscal* (مالیاتی) – Related to government revenue and spending 📢 *Attention Please!* We appreciate your commitment to acquiring knowledge through our summaries. 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Click the link below to join now 🔗 [Dawn Article Summaries](https://cssmcqs.com/dawn-editorials-articles-summary-for-students-pdf-download/) *WhatsApp Channel Link*: [https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y](https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y) --- *www.dawn.com* *The cost of relief* *Editorial* *3–4 minutes* ALTHOUGH bound by the IMF's stern conditions, the federal government appears desperate to provide tax relief to middle-class salaried individuals as well as businesses, especially the real estate lobby, in the upcoming budget. This desire seems to have grown stronger in the aftermath of Pakistan's recent tactical military win against India as the ruling party hopes to turn the 'feel-good factor' in the country into wider political support for itself. The question, however, remains: can the government secure 'concessions' from the multilateral lender to implement its 'relief plans' to win over middle-class voters? What we have seen is that the government was compelled to delay the announcement of its budget by more than a week to June 10 when the IMF mission left the country after inconclusive policy discussions on Islamabad's budget proposals last month. No final agreement was reached due to differences mainly on the proposed increase in defence expenditure and tax cuts for individuals and businesses. The Fund later said in a statement that the discussions would continue virtually regarding the budget "over the coming days", revealing some disagreement. The Fund added that the talks "focused on actions to enhance revenue — including by bolstering compliance and expanding the tax base — and prioritise expenditure". The outcome of the ongoing virtual budget talks remains inconclusive — otherwise we would have heard from the Fund or the government that the differences had been sorted out. The IMF feels that the government's expenditure and tax relief proposals will hit the overarching target of the primary budget surplus — whose size determines the reduction or increase in public debt in a given fiscal year — of 1.6pc of GDP agreed upon by the two sides in policy discussions. The lender wants the authorities to come up with credible proposals, identifying alternative sources of revenue to offset the impact of the increase in defence and other expenditures and the cuts in taxes. The lender has valid reason to be concerned. The widening shortfall of more than Rs1tr in tax collection in the first 11 months of the current fiscal year, despite the imposition of record new taxes and the blocking of tax refunds, justifies the IMF's apprehensions. The massive shortfall in tax recovery makes it clear that the FBR may not be able to meet even the revised collection target. The IMF had recently agreed to slash the tax collection target of nearly Rs13tr by Rs640bn for the full fiscal year. With the Fund insisting on fortifying the primary budget surplus target against any additional expenditures and potential revenue slippages, the nation's fiscal authorities have a formidable challenge ahead of them as they try to balance the IMF's programme goals with the government's growing desire to deepen the feel-good factor through some fiscal extravagance. *Published in Dawn, June 2nd, 2025*