ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to present a draft of its upcoming investment policy and ensure transparency in the operations of the Special Investment Facilitation Council (SIFC). This request comes as the IMF predicts a consumer price index (CPI) based inflation rate of 12.7% for Pakistan’s 2024-25 budget.
The IMF has also queried about tax exemptions planned for the new Special Economic Zones (SEZs) under the China-Pakistan Economic Corridor (CPEC). Additionally, the IMF has suggested maximizing non-tax revenues, potentially increasing the Petroleum Development Levy (PDL) to Rs1.08 trillion or introducing a carbon levy, to compensate for the zero GST on petroleum products.
Despite the government’s macroeconomic projections, the IMF and Pakistani authorities have differing views on the economic framework for the next fiscal year. The IMF’s estimates include a GDP growth rate of 3.5% and an inflation rate of 12.7%, while the Ministry of Finance anticipates a GDP growth rate between 3.7% and 4% with inflation around 11-12%.
Moreover, the IMF has projected debt servicing costs of Rs9.787 trillion for the next budget and has emphasized the need for transparency in SIFC operations. The IMF also inquired about investment in various projects and the privatization of state-owned enterprises (SOEs) like Pakistan International Airlines (PIA).
Pakistani officials indicated that the new investment policy, which will also focus on SEZs, is in the drafting stage and will be revealed after thorough discussions. The IMF’s engagement with Pakistani authorities remains informal, with ongoing negotiations aimed at securing a new bailout package under the Extended Fund Facility (EFF)
