ISLAMABAD: The Pakistan government is exploring the introduction of a carbon levy in the federal budget for 2025-26, with discussions set to begin next week during ongoing talks with the International Monetary Fund (IMF). The government aims to seek approval from the IMF for this new tax measure as part of its broader efforts to revamp the country’s tax regimes.
The upcoming round of talks, scheduled for February 24 to 28, will involve a technical delegation from the IMF engaging with federal and provincial representatives. Key topics will include green budgeting, climate-related spending, and tracking and reporting mechanisms. In addition to the proposed carbon levy, discussions are expected to cover electric vehicles and related subsidy frameworks.
The IMF is also anticipated to push for the expansion of green budgeting in the upcoming fiscal plan, which could include broader measures to address environmental concerns while ensuring economic sustainability. The proposed carbon levy is seen as a significant step toward aligning Pakistan’s fiscal policy with global climate goals, though the final details will emerge after further negotiations with the IMF delegation.
