Pakistan is set to face another wave of inflation as the International Monetary Fund (IMF) has set 23 new conditions to the government for the next loan tranche.
According to the IMF’s conditions, the government has been asked to impose restrictions on fixing the wheat support price and to levy sales tax on high-value surgical items, which could lead to price increases in the health and agriculture sectors. In addition, reforms in the energy sector and changes to the laws governing state-owned enterprises have also been proposed.
Among the sales tax demanded on various items by the international lender, the most worrisome is petroleum products which are already heavily taxed. If the IMF’s demand for an 18% tax is accepted, petrol is likely to become Rs. 47 per liter more expensive, according to local media reports.
According to media reports citing sources in the Ministry of Petroleum, the IMF has imposed a condition of an 18% tax on petroleum products for cost recovery.
Meanwhile, the government has proposed imposing up to 2% sales tax on petroleum products, but the IMF has not yet approved this proposal. If the IMF’s demand is accepted, the 18% tax would increase petrol prices by Rs. 47 per liter, while the imposition of sales tax on diesel would require an increase of Rs. 50 per liter.
Latest IMF’s conditions will directly affect the daily lives of the public, as new taxes and price hikes may make living more difficult for ordinary citizens.
