Pakistan has informed the International Monetary Fund (IMF) that it will not impose additional taxes, but instead focuses on legal and administrative measures to fill the expected deficit in revenues. The government also presented a contradictory center on electricity pricing, and is seeking to obtain a general sales tax (GST) with a simultaneous proposal for new financial fees on electricity bills, dawn I mentioned.
With the conclusion of technical discussions, official policy talks are scheduled to start on March 10, as the International Monetary Fund will officially respond to Pakistan’s proposals. The sources said that the International Monetary Fund has already refused the government’s request to reduce or eliminate the tax and services tax on electricity, on the pretext that such relief would lead to revenue.
However, the fund welcomed the government’s proposal to impose an additional 2.83 rupees for each additional unit on electricity bills during the next five years to finance 1.2 trillion rupees in loans aimed at clearing part of the circular debt.
These new additional fees will add the current cost of funding RS1.47 to each financing unit carried by consumers due to the previous borrowing. Despite the repeated government assurances to reduce electricity rates, this measure will effectively pass the financial burden of inefficiency in the energy sector on consumers.
The International Monetary Fund also rejected the government’s request to extend the winter tariff package, which provides fewer electricity rates for additional industrial and commercial consumption.
Meanwhile, officials of the International Monetary Fund have briefed on plans to reduce the customs tariff to eradicate the solar network from 26 rupees per unit to 10 rupees. Although this change may discourage consumers from turning into solutions outside the network, officials confirmed that the International Monetary Fund will monitor the situation and respond accordingly if necessary.
