The International Monetary Fund (IMF) has indeed suggested that Pakistan should increase its General Sales Tax (GST) on specific items, including medicines and petroleum, to 18 percent. This recommendation is part of a larger plan to stabilize Pakistan’s economy and address its financial challenges. The IMF’s proposal aims to improve Pakistan’s fiscal position by broadening the tax base and increasing revenue. By raising the GST on medicines and petroleum, the government can generate more funds to support its budget and invest in essential public services. However, this measure may also have some negative impacts on the common people, as it could lead to higher prices for these items. It is essential to note that the IMF’s recommendations are not always adopted in their entirety, and each country has the flexibility to choose which suggestions to implement. In Pakistan’s case, the government will have to carefully consider the potential benefits and drawbacks of increasing the GST on medicines and petroleum before making a decision.
In an astonishing revelation, the International Monetary Fund (IMF) has allegedly advised the freshly-elected government of Pakistan to abolish the sales tax concessions, as per a recent report sent to Islamabad. This groundbreaking recommendation came after a team of IMF experts visited the country in December 2023 and submitted their report in February 2024, just before the FY2024-25 budget planning. The report suggests that an extensive range of products, such as unprocessed food, stationery, medicines, petroleum products, and many more, should be subjected to a standard rate of 18% GST. In an extraordinary claim, the IMF has estimated that by rationalizing the GST rates, Pakistan could potentially generate a staggering 1.3% of its Gross Domestic Product (GDP) revenue, which translates to an astounding Rs1,300 billion for the national exchequer.
Pakistan is reportedly attempting to secure a Bangladesh-style arrangement with the International Monetary Fund (IMF) for a whopping $1.5 billion, specifically earmarked for combating climate change. Sources have disclosed that prior to requesting this substantial loan from the global financial powerhouse, Pakistan is expected to allocate an initial sum for environmental enhancement initiatives.
This ambitious plan from the IMF involves not only the removal of all distortionary tax policy changes related to compliance but also the extraordinary steps of abolishing minimum taxes, additional taxes, and even the Ninth and Tenth Schedules. Recently, it was revealed that Pakistan is seeking not only a loan package from the International Monetary Fund but also an additional $1.5 billion in climate finance to further bolster its economy. It has been reported that the country is eagerly seeking climate finance not only to enhance the loan package but also to potentially transform it into a monumental financial aid program. This groundbreaking initiative, spearheaded by the International Monetary Fund, aims to provide affordable, long-term financing to nations grappling with the dual challenges of climate change and pandemics, thereby addressing two of the most pressing global issues of our time. In an surprising turn of events, the country is reportedly considering an incredible expansion of the program, potentially reaching a mind-boggling $7.5-8 billion, according to insider sources. Furthermore, these sources reveal that the nation is not only looking to increase the overall financial aid but also to incorporate climate finance as a significant component in the upcoming bailout package.
