The federal government, under Prime Minister Shehbaz Sharif, is set to raise the petrol levy on petrol and diesel by Rs5 per litre as part of revenue-enhancing measures ahead of a staff-level agreement with the International Monetary Fund (IMF).
According to sources, the IMF is expected to finalize the staff-level agreement soon, following the submission of a draft Memorandum of Economic and Financial Policies to Pakistani authorities. Once completed, the agreement will be signed by the finance minister and the State Bank governor, allowing the release of a $1.2 billion tranche to support the country’s finances.
The proposed increase in the petrol levy forms part of a broader strategy to strengthen both tax and non-tax revenues. Alongside this, the government has reduced the development budget by around Rs100 billion, in consultation with the IMF, to help maintain stability in fuel prices despite global market pressures.
In parallel, discussions with the IMF have focused on tackling circular debt in the power and gas sectors, as well as addressing economic challenges stemming from rising global oil and fertilizer prices, coupled with regional geopolitical tensions.
The government is also exploring measures to boost other sectors, particularly real estate. Plans under consideration include reducing taxes on property transactions and offering incentives to attract investment from overseas Pakistanis. These steps are intended to complement a recently approved concessional housing scheme, providing easier access to affordable housing while encouraging investment.
Overall, the increase in the petrol levy is part of a wider effort to stabilize Pakistan’s economy, improve revenue collection, and address structural challenges in critical sectors. By combining fiscal measures like the levy hike with targeted support for housing and real estate, the government aims to balance revenue needs with economic growth and social welfare objectives, ensuring that key financial commitments, including those under the IMF program, are successfully met.
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