The International Monetary Fund (IMF) has rejected Pakistan’s request to reduce tax transactions taxes, sources familiar with negotiations said Monday.
The rejection occurs when Islamabad struggles to meet the conditions to ensure an agreement at the personnel level, which would pave the way for greater financial assistance.
According to the sources, the IMF also refused to reduce tax withholding by 2% and rejected the request of Pakistan of fiscal deduction on tobacco and drinks.
In addition, there was no agreement on the relaxation of Pakistan’s income objectives by March 2025, which makes it difficult for the government to comply with its tax commitments under the IMF program.
It will be required that Pakistan provide additional guarantees to finish the agreement at the personnel, the sources said. The IMF has also established a condition that prevents the provinces from intervening in the acquisition of wheat.
Meanwhile, the global lender has shown willing to incorporate climatic financing into the program. Under the resilience and sustainability center, Pakistan will be offered financial assistance for climate -related initiatives.
With the key requests for fiscal relief denied, Pakistan faces additional pressure to implement difficult fiscal measures. The government must now provide additional guarantees to unlock the next section of IMF financing.
