The International Monetary Fund (IMF) has recommended that Pakistan impose an 18% General Sales Tax (GST) on petrol. This proposal includes ending the tax exemption on all items, with a specific focus on petrol.
The newly elected government of Pakistan is also facing pressure to introduce a sales tax on petroleum products and to add an additional Rs 60 charge to enhance tax revenue.
Previously, the IMF had suggested that Pakistan’s government apply an 18% GST on a range of essential items. This list includes food, medicine, petroleum products, and stationery.
The IMF advised expanding the list of items subjected to the standard 18% GST rate. This expansion would encompass unprocessed food, stationery, medicine, and petroleum products, among others.
According to the IMF’s estimates, implementing these GST rate adjustments could potentially generate additional revenue equivalent to 1.3% of Pakistan’s Gross Domestic Product (GDP). This amounts to approximately Rs1,300 billion for the national treasury.
It is noteworthy that Pakistan and the IMF have successfully reached a staff-level agreement on the second and final review under Pakistan’s Stand-By Arrangement.
Nathan Porter, who led the IMF team during the negotiations, confirmed this agreement in an official statement.
This agreement demonstrates the IMF’s support for Pakistan’s stabilization program, providing an approved loan of US$3 billion (SDR2,250 million) to Pakistan.
This recommendation from the IMF is part of broader efforts to strengthen Pakistan’s fiscal policies, increase revenue collection, and support economic stability and growth in the country.
