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KARACHI: Diamond sets and a drone light show at a near-million-dollar wedding have become evidence for Pakistan’s tax authorities under a new “Lifestyle Monitoring Cell” tasked with scanning social media for lavish spenders, officials said.

A team of 40 investigators from the country’s Federal Board of Revenue (FBR) has started scouring Instagram, TikTok and YouTube posts this week, to match influencers, celebrities, realtors and businesspeople with disproportionate filings.

“It’s open-source – their Instagram accounts are a public declaration,” one senior FBR official said, adding tax evasion cases can be opened up in a matter of hours. The FBR did not respond to a Reuters request for comment.

The monitoring cell has been formed to address Pakistan’s chronic inability to meet revenue collection targets, and to help meet tougher goals set in this year’s International Monetary Fund-backed budget.

The country has one of the lowest tax-to-GDP ratios in Asia, a chronic weakness that has forced it into nearly two dozen IMF programs. Less than 2 percent of the country pays its income tax.

The unit was formally set up this month, according to an internal document seen by Reuters, which said its mandate was to “systematically monitor, scour and analyze data from major social media platforms” and identify people who display wealth but are either not registered for tax or declare income that appears incongruous with their expenditures and assets.

According to the document, the cell will build digital profiles of suspects, assess the money behind their lifestyles, and prepare reports that can be used for tax or money laundering investigations.

It will maintain a central database of evidence, including screenshots and timestamps, the document said.

DIAMONDS, DRONES, DJS, AND DATABASES

Officials said one wedding under review carried a price tag of nearly 248 million rupees ($878,000).

Documents seen by Reuters showed nearly $283,000 spent on diamond and gold sets and $124,000 on bridal outfits by leading South Asian designers.

Guests entered through a hallway of floral arches as drones lit up the sky, before sitting down to multi-course meals prepared for 400 people.

The celebrations featured top makeup artists, DJs and traditional qawwali music bands, while international consultants helped choreograph the six-day affair that officials said epitomized the kind of extravagant spending now in their crosshairs.

The wedding is just one of several cases under review, officials said. Investigators are also examining videos of luxury cars, high-end property tours and influencers flaunting expensive lifestyles.

“People themselves tag the event managers, the caterers, the jewellers, etc. It makes our work easy,” another official said, adding the expenditure of the two families involved did not match their income declaration.

Despite its recent formation, the new unit has already shortlisted multiple files for deeper scrutiny, officials said.

Past efforts to net high earners fizzled, but officials say the new focus on social media offers stronger leads and quicker ways to flag undeclared wealth.

KARACHI: Pakistan’s government is expected to secure deals today, Wednesday, to raise about Rs1.3 trillion ($4.6 billion) in Islamic financing from banks, market experts said a day earlier, to retire energy sector debt and meet conditions of the International Monetary Fund’s (IMF) $7 billion loan program.

The funds will be raised through Sukuk or Islamic bonds and a “financing facility agreement” will be signed at the Prime Minister’s House “for circular debt reduction of the power sector,” according to a ceremony invitation sent out by the state-run Central Power Purchasing Agency (CPPA) earlier today.

The agency is Pakistan’s state-run power market operator which buys electricity from power producers in bulk and sells it to distribution companies, handling payments, contracts and billing for the national grid.

Its invitation did not name the participating banks or specify the exact financing target, but energy analysts following the development said the government plans to secure as much as Rs1.3 trillion from 18 banks.

“The government is expected to raise about Rs1.3 trillion in Islamic financing from almost all the banks to settle its debt,” said Adnan Sami Sheikh, assistant vice president of research at Pakistan Kuwait Investment Company, a joint venture between the governments of Pakistan and Kuwait.

Arab News reached out to Pakistani energy ministry spokesman Zafar Yab Khan who did not immediately comment on the development, while Finance Adviser Khurram Schehzad did not respond to a request seeking the government’s version.

Circular debt — an ever-growing chain of unpaid bills within Pakistan’s power and gas sector where one entity’s arrears cascade to the next — has for years strained the economy, with debt-servicing now a major drain on public revenue.

Pakistan’s cash-strapped government relies heavily on domestic and external loans to repay its mounting obligations amid slow revenue growth.

“The impact of this development would be positive for the economy and markets,” Sheikh said.

The government is moving ahead as the IMF team is expected to arrive for a second review of Pakistan’s flood-hit economy. The mission, originally scheduled for September 15, will examine end-June 2025 performance and continuous criteria.

“The government has to show to the IMF that it has reduced the outstanding balance of the circular debt, which is a major objective here,” said Muhammad Saad Ali, head of research at Lucky Investments Limited.

Reducing Pakistan’s energy-sector debt was an IMF requirement, he added.

Ali said the targeted amount would roughly comprise Rs683 billion ($2.4 billion) in refinancing of existing debt held by the government’s Power Holding Company and about Rs600 billion ($2.1 billion) in fresh loans to be secured from 18 banks.

“The government aims to retire its old expensive debt as well as reduce late payment charges,” Shankar Talreja, head of research at Topline Securities Limited, told Arab News.

He noted that power producers currently charge a late-payment surcharge of KIBOR plus 2.5 to 4.5 percent.

“This amount will not accrue when the government pays its debt to those power companies using the bank financing it would secure at KIBOR minus 0.9 percent [tomorrow],” Talreja said.

In a separate research note, Topline Securities said electricity consumers will ultimately repay the government’s bank debt through a Power Holding Limited (PHL) surcharge of Rs3.23 per unit, which is already being collected in monthly utility bills.

Analysts said the transaction would also boost Pakistan’s stock market, benefiting listed companies such as Oil & Gas Development Company, Pakistan State Oil, Pakistan Petroleum, Hub Power Company, Lucky Cement, Fauji Fertilizer Company and Thal Limited.

“It would unlock the stuck-up liquidity for energy-sector companies, which would now be able to invest in upgrading their infrastructure as well as pay some dividends to their shareholders,” Sheikh said.

Ali of Lucky Investments added that settling circular debt would help both private power producers and the government manage future liabilities.

“These are benefits which will go down well with the IMF program. The IMF has already greenlighted this,” he said.