IMF seeks draft of Pakistan’s new investment policy, transparency in SIFC operations

The International Monetary Fund (IMF) has asked Pakistan to share the draft of its upcoming investment policy and ensure transparency in the Special Investment Facilitation Council (SIFC). 

The News reported that the global lender also inquired about tax exemptions for the forthcoming Special Economic Zones (SEZs) under the China-Pakistan Economic Corridor (CPEC).

Regarding the SIFC, Pakistan informed the IMF’s assessment team that the new investment policy is under preparation and will be announced after thorough deliberations. 

The IMF team, emphasizing the need for transparency in the SIFC’s operations, inquired about potential investments in various projects and specifically asked about the privatisation of Pakistan International Airlines (PIA) and other state-owned enterprises (SOEs).

For the upcoming four SEZs under CPEC, the Board of Investment officials informed the IMF that there are currently over two dozen SEZs, with four more being added. These SEZs will receive similar tax incentives as others. The forthcoming investment policy, focusing on SEZs, will be unveiled in due course. The IMF has requested a draft of this investment policy.

On non-tax revenue targets, the IMF has proposed maximizing non-tax revenues, including increasing the Petroleum Development Levy (PDL) to raise up to Rs1.08 trillion in the next fiscal year or imposing a Carbon levy to offset the zero rate of GST on petroleum products. 

The IMF also recommended an 18% GST on petrol and diesel along with the PDL. 

The government is considering imposing a levy to ensure it does not become part of the federal divisible pool under the NFC Award, thereby not being distributed among the provinces.