Pakistan Increases Fuel Tax as It Moves Closer to $1 Billion IMF Loan

Pakistan is making key financial moves as it nears another $1 billion payment from the International Monetary Fund (IMF). In a recent decision, the government has raised taxes on petroleum products, a step aimed at meeting IMF requirements and strengthening the country’s economic position.

This comes at a time when Pakistan’s foreign exchange reserves have been showing signs of improvement. The country has been struggling with economic challenges, but recent months have seen some relief as inflation begins to ease. Lower inflation could bring much-needed relief to consumers, though the increase in fuel taxes might add some pressure.

The government hopes that these financial adjustments will help stabilize the economy and secure continued support from the IMF. As Pakistan moves forward, the focus remains on balancing economic recovery with public concerns over rising costs.

Pakistan Raises Petroleum Tax as It Moves Closer to Next $1 Billion IMF Payment

Pakistan is stepping up efforts to meet International Monetary Fund (IMF) conditions by increasing the petroleum development levy. The government has raised the tax by Rs10 per liter, bringing it to Rs70 per liter, according to a notice posted by the Oil and Gas Regulatory Authority (OGRA).

This move comes as Pakistan looks to secure the second $1 billion installment of its $7 billion loan agreement with the IMF, which was signed last year. The IMF recently acknowledged that Pakistan is making progress toward meeting its financial commitments.

According to Mohammad Sohail, CEO of Topline Securities Ltd., the tax hike is part of the government’s strategy to compensate for declining tax revenues, especially as IMF review discussions continue.

Nathan Porter, head of the IMF mission to Pakistan, praised the country’s economic measures, stating that “program implementation has been strong.” His team recently visited Islamabad and Karachi (February 24 – March 14) to assess the country’s financial performance.

Pakistan is now waiting for a staff-level agreement with the IMF, which is a crucial step before the loan installment is approved. Discussions will continue virtually in the coming days, but no specific timeline has been provided for the final decision.

As Pakistan navigates its economic challenges, securing the IMF funds remains a top priority to stabilize its economy and boost investor confidence.