IMF suggests Pakistan impose 18 per cent GST on food, medicines, petroleum: Report

The government of Pakistan has been advised by the International Monetary Fund (IMF) to impose an 18 per cent General Sales Tax (GST) on food, medicine, petroleum items, and stationery, reported ARY news.

The IMF experts in a report to Islamabad have suggested Pakistan's newly elected government put an end to sales tax relaxation.

Following its December 2023 visit to Pakistan, the IMF team sent out a report in February 2024 that included several suggestions ahead of the FY2024–2025 budget.

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The IMF has suggested placing a number of goods, such as unprocessed food, stationery, medicine, POL products, and others, under the standard 18 per cent GST rate.

It assessed that rationalising GST rates could generate 1.3 per cent of Gross Domestic Product (GDP) revenue which equals Rs 1,300 billion in the national exchequer.

The IMF has overall demanded the removal of all the distortionary tax policy changes related to compliance, which includes the abolition of minimum taxes and additional taxes, as well as the abolition of the Ninth and Tenth Schedules.

In February, there were reports that Pakistan would seek a loan package from the International Monetary Fund in addition to $1.5 billion in climate finance.

Shehbaz Sharif aims to join G20 after being 'elected' Pakistan PM

Shehbaz Sharif, leader and brother of the three-time ex-PM Nawaz Sharif, won enough votes in the country’s National Assembly to retake the premiership.

He delivered the victory speech on Sunday (Mar 3) and said that he would conduct what he called a “deep surgery” and bring changes to the system to get the cash-strapped country out of the economic crisis and secure membership in the Group of 20 (G20) countries by 2030.

Shehbaz spoke about the alarming debt crisis that Pakistan is facing and noted how even the expenditures of the National Assembly were being paid by borrowed money.

“But if we decide to do a deep surgery and bring changes in the system, basic reform…I have no doubt…we can either get rid of a life of debt or we move forward with heads down in shame,” said the PM-designate.

Pakistan has long struggled with a heavy debt load. Recently,it secured another bailout by the International Monetary Fund (IMF) which was Pakistan’s 23rd since it gained independence in 1947.

The inflation rate in the country reached 29.7 per cent in December, and in 2023, the Pakistani rupee was Asia’s worst-performing currency.

(With inputs from agencies)