Islamabad:
The Minister of Finance, Muhammad Aurengzeb, has said that conversations between Pakistan and the International Monetary Fund for more than $ 1 billion sections remained successful and a formal statement by the fund will be published today (Saturday).
The Minister of Finance made the statement during a meeting at the home of the Prime Minister, which Shehbaz Sharif presided to listen to the complaints of the business community, according to government sources.
Shehbaz Sharif asked his finance minister if the IMF delivered the memorandum of economic and financial policies (MEFP) to Pakistan, the set of policy documents that define the conditions for the loan section.
Everything is in order and the IMF would publish the statement on Saturday, it is said that Aurangzeb told the prime minister in the presence of the business community on Friday.
Aurengzeb did not respond to a request for comments if he made these comments at the meeting. However, the multiple sources present at the meeting were confirmed to the Express PAkGazette.
It has also been decided to increase the oil tax to RS70 per liter, RS10 higher than existing rates, and use funds to reduce energy prices, fountains said. The tax will increase to absorb price reduction, they added.
Pakistan and IMF conversations were held from March 3 to 14 for the first review of the Extended Fund (EFF) for the July-December period of the current fiscal year. Before the EFF mission, the IMF also celebrated meetings for the Center for Climate Resilience (CRF).
The IMF Board is expected to consider Pakistan’s application for the completion of the first review of more than $ 1 billion in May. It will also approve the new CRF program worth more than $ 1 billion in the first week of May, the sources of the Ministry of Finance said.
The EFF section will be published in May after the approval of the Board, but the disbursements under the estimated climatic installation of $ 1 billion will be linked to real spending in the initiatives related to the climate.
The sources of the Ministry of Finance said that before the IMF departure, a broad agreement on the MEFP had been reached and that the final version will be ready within a month. After that, the case will be distributed for the approval of the Board, which is expected to take it in early May.
Assessment
The last day of conversations, the IMF held a final meeting with the Minister of Finance and the Secretary of Finance. Sector meetings were also held at the request of Pakistan to reduce the amount of RS791 per million rupees of the British thermal unit (MMBTU) Grid in approximately RS250 to RS300. Both parties also gave the final touches to the amendments in the Law of the Fund of Sovereign Richness of Pakistan to align with the prescription of the IMF.
The sources said that the oil division addressed the issue of recently introduced with the IMF and requested that it reduce the rates when linking it with the average price of electricity instead of the maximum time rates.
The sources said the IMF did not accept the government’s application and said the highest rates were necessary to force industries to change in the electricity network abandoning gas generation generation plants.
The government notified last week a 23% increase in gasoline prices for industrial captive power plants (CPP) by imposing RS791 for MMBTU tax.
After the imposition of the new tax, the total gasoline prices for captive energy plants have increased to RS4,291 by MMBTU, since the government had also increased gasoline rates for that category in RS500 a few months ago.
Gas prices are now even higher than the imported prices of LNG, a policy that aims to force industries to change the national network. However, people are reluctant to buy the electricity of the network due to exorbitant prices, which are the results of the transmission of the sector’s inefficiency to consumers and incorrect energy policies.
The Government will increase the network tax by 10% in July 2025, followed by 15% in February 2026 and another 20% for August 2026, carrying the final price near RS6,000 to make the gas supply punitive so that the industry changes to the national electricity network.
During the meeting with the business community, the industrialists based in Lahore complained of 600 containers of imported goods, which were trapped in Karachi. The prime minister instructed the FBR to clear these loads over the weekend and report.
New fiscal policies
The sources said the discussions also remained in fiscal policies for the next fiscal year. Pakistan asked the IMF that in order to end the disparity in fiscal policies, 18% of the sales tax should be applied at the import level, with deductions applied in the subsequent retail stages.
Imported goods are already taxed at 18%, except for a few goods, that create distortions and encourage the use of imported raw materials on locally available goods.
The FBR assured the IMF that it would further eliminate the distortions of the sales tax and the income tax to end the culture of rents, the sources said. In addition, income tax reimbursements currently available for some sectors will be withdrawn in the next budget, the sources said.
Carbon tax
The sources said that understanding has also been reached in principles to slapped the carbon tax with effect as of July. The tax is intended to discourage the use of fossil fuels and promote renewable technologies.
Ironically, the Government practically discarded the policy of net measurement panels and introduced the concept of gross measurement by separating the price of units generated by solar energy and the units imported from the national network.
The IMF wants to impose RS3 per liter of carbon gravamen in gasoline and diesel from July of this year, which will increase in another RS4 in fiscal year 2027.
The IMF did not accept Pakistan’s opinion that the carbon tax will affect the poor and lower middle class and can also have political implications. The government was also the opinion that the demand for fuel was inelastic and that the tax cannot reduce it, but the IMF did not agree.
The fund also ignored the government statement that Levy will increase low -cost oil smuggling and cannot accelerate the change of electric vehicles.
