IMF demands increase in levy on petrol & diesel

ISLAMABAAD:  The International Monetary Fund (IMF) has demanded that the government increase levy on petrol and diesel before releasing the next tranche of $12 billion of the loan program to Pakistan.

According to sources, a staff-level agreement for the next tranche between Pakistan and the IMF is likely to be reached in the next few days. For which the IMF mission has shared the draft Memorandum of Economic and Financial Policies with the government.

Federal Finance Minister Muhammad Aurangzeb and the Governor of the State Bank of Pakistan will sign the draft if there is a consensus.

The IMF, while urging the government to increase tax and non-tax revenues, has suggested that after high octane, levy on petrol and diesel should be increased by Rs 5 per liter to increase revenues.

The government has also taken the IMF into confidence on the decision to cut Rs 100 billion in the development budget. While the Fund has expressed reservations over the proposal to directly give the government the authority to appoint heads of government institutions.

Furthermore, the government has also shared with the IMF a plan to control circular debt in the electricity and gas sector. While the proposals to provide relief to the real estate sector and reduce taxes on the purchase and sale of properties have been made subject to the approval of the IMF.

According to experts, if the petroleum levy is increased, it is likely to have an impact on inflation and transport costs. However, the government is calling it indispensable to meet the conditions of the IMF program.