Pakistan has informed the International Monetary Fund (IMF) that it will not impose additional taxes but instead focus on legal and administrative measures to bridge the anticipated revenue shortfall. The government also presented a contradictory position on electricity pricing, seeking relief on general sales tax (GST) while simultaneously proposing a new financial surcharge on electricity bills, Dawn reported.
As the technical discussions concluded, formal policy-level talks are set to begin on March 10, where the IMF will formally respond to Pakistan’s proposals. Sources said the IMF has already rejected the government’s request to reduce or eliminate GST on electricity, arguing that such relief would undermine revenue collection.Â
However, the Fund welcomed the government’s proposal to impose an additional Rs2.83 per unit surcharge on electricity bills for the next five years to finance Rs1.2 trillion in loans aimed at clearing part of the circular debt.
This new surcharge would add to the existing Rs1.47 per unit financing cost currently borne by consumers due to past borrowings. Despite repeated government assurances of lowering electricity rates, this measure would effectively pass the financial burden of inefficiencies in the power sector onto consumers.
The IMF also dismissed the government’s request to extend the winter tariff package, which offers lower electricity rates for additional industrial and commercial consumption.Â
Meanwhile, officials briefed the IMF about plans to cut solar net-metering tariffs from Rs26 per unit to Rs10. While this change could discourage consumers from switching to off-grid solutions, officials assured the IMF they would monitor the situation and respond accordingly if necessary.
