Pak Cries for help! Nation is ready to impose taxes worth Rs. 200 billion to acquire IMF funding

Days after agreeing to the International Monetary Fund’s (IMF) demands to restart a stalled loan programme, the Pak government has prepared two draught ordinances to impose Rs 200 billion in new levies, according to a media report.

Price increases for gas and electricity

Also, The government is considering ending the subsidy for the power sector and raising sales taxes on raw materials used by export-oriented industries, particularly those in the textile industry. It further stated that additional price increases for gas and electricity are planned.

Amid the greatest economic crisis,  Pak has increased the cost of gasoline and fuel by Rs 35 as of Sunday.

Speaking to the media, Pak finance minister Ishaq Dar announced a Rs 35 rise in the cost of gasoline and diesel, “The Pakistani rupee witnessed devaluation last week […] and now we are seeing an 11% spike in the prices of petroleum products in the international market.”

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Need for IMF Fund

This occurs at a time when Pakistan is going through its worst economic crisis, with its reserves having fallen to a crucial level of USD 3.7 billion and requiring immediate assistance to prevent default. The country can only be saved through the IMF.

Pakistan must finish the ninth assessment of a $7 billion IMF programme in order to get the $1.2 billion tranche and open the door to funding from allies and other multilateral lenders.

A market-based dollar-rupee exchange rate, a high-interest rate, and the implementation of a 17% general sales tax on gasoline and diesel within a week are among the IMF’s requirements.

According to Miftah Ismail, a former finance minister, IMF cash that has been unlocked will help Pakistan avoid defaulting on its international debt.

During the week ending January 20, Pakistan’s foreign exchange reserves fell to a record nine-year low of $3.678 billion.