The International Monetary Fund (IMF) has turned down Pakistan’s request to reduce taxes on property transactions, further complicating the country’s efforts to secure a staff-level agreement for financial assistance. According to sources familiar with the negotiations, the IMF’s refusal adds to Islamabad’s challenges as it works to meet the strict conditions set by the global lender.
Among the rejected requests were Pakistan’s appeals to lower the withholding tax by 2% and grant tax relief on tobacco and beverages. Additionally, no agreement was reached on relaxing Pakistan’s revenue targets for March 2025, leaving the government under increased pressure to meet its fiscal commitments under the IMF programme.
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To move forward, Pakistan will need to provide additional guarantees to finalise the agreement, sources revealed. The IMF has also placed a condition preventing provinces from intervening in wheat procurement, adding to the government’s difficulties.
However, in a more positive development, the IMF has shown flexibility by agreeing to include climate finance within the programme. Pakistan is set to receive financial assistance for climate-related initiatives under the Resilience and Sustainability Facility, offering some relief amid the tough fiscal measures.
As Pakistan faces mounting economic pressures, the denial of key tax relief requests underscores the difficult road ahead in securing the next tranche of IMF funding.
