ISLAMABAD: The International Monetary Fund (IMF) has turned down Pakistan’s request for tax exemptions on foreign investment projects.
Pakistan’s Special Investment Facilitation Council (SIFC) had presented the request during a detailed briefing with the IMF delegation, arguing that tax relief would be a key factor in attracting foreign investment. However, the IMF refused the proposal, emphasizing the need to maintain fiscal discipline.
During the session, SIFC officials highlighted various investment opportunities, governance frameworks, and infrastructure initiatives. A primary focus was the proposed railway project connecting Chagai to Gwadar, designed to facilitate the transportation of minerals from the Reko Diq mine to the port city.
Pakistani officials stressed the importance of the railway project for economic growth and urged the IMF to approve tax exemptions for this strategic initiative. The feasibility study for the railway was conducted jointly by the Ministry of Finance and the Ministry of Railways. Officials also revealed that potential investor countries have requested state-backed guarantees before committing financial support.
However, under the current loan agreement with the IMF, the Pakistani government is unable to offer such guarantees for every investment project.
On a separate note, the IMF has previously approved Pakistan’s proposal to reduce electricity prices, with a final decision expected next month. Sources suggest that electricity base tariffs could see a reduction of Re1 to Rs2 per unit, with the National Electric Power Regulatory Authority (NEPRA) and the Ministry of Energy now authorized to implement rate adjustments.
However, the IMF has raised concerns over the delays in the privatization of Distribution Companies (DISCOs), stating that improvements in the power sector will remain difficult without addressing the performance of these companies.
