Economic Impact of Implementation of Prior Actions Chapter 6: Economic Impact of Implementation of Prior Actions The Government presented on the 30 th of December two bills, the Finance(Supplementary) Bill, 2021 and the State Bank of Pakistan(Amendment Bill), 2021 , in the Parliament. This is part of the process of implementation of prior actions for successful completion of the on-going review of the IMF program with Pakistan. Completion of these actions will lead to the approval by the IMF Executive Board of the release of$1 billion to Pakistan on the 12 th of January 2022. This chapter is organized as follows. The first section identifies the tax reforms committed to by the Government of Pakistan in the Letter of Intent to the IMF on the 9 th of April 2021, which remained unimplemented up till the commencement of the sixth review in October 2021. The second section of the article describes the key features of the Federal general sales tax(GST) and the reforms proposed in the Finance(Supplementary) Bill, 2021. Results of the analysis of the impact on prices, growth and on different segments of the population are presented at the end of this section. The third section focuses on the key features of the State Bank(Amendment) Bill, 2021. Analysis is undertaken of the impact of greater autonomy of the Central Bank. Finally, a summary is presented in Section 4. 6.1 Agenda of Tax Reforms The reforms agreed to in the letter of intent issued by the Government to the IMF on the 9 th of April are as follows: Sales Tax reforms: This will include, first, elimination of all zero-rated goods in the Fifth Schedule of the Sales Tax Act, 1990, except on export and machinery, and levy of standard sales tax rate. Second, removal of all reduced rates in the Eighth Schedule and bring them all to the standard rate. Third, elimination of exemptions in the Sixth Schedule excluding a small subset of goods(i.e. basic food, medicines, live animals for human consumption, education and health-related goods) and bring all others to the standard rate. Fourth, removal of the Ninth Schedule to replace a specific tax rate for cell phones with the standard rate., These reforms are expected to yield 0.7 percent of the GDP on an annualized basis. 75