ISLAMABAD: The government is considering increasing the petroleum levy on petrol and diesel after already raising the levy on high-octane fuel, as Pakistan moves closer to a staff-level agreement with the International Monetary Fund for the next loan tranche.
Pakistan and the IMF are expected to sign a staff-level agreement for the release of the next $1.2 billion tranche under the loan programme within the next few days.
Sources said the IMF mission has shared the draft of the Memorandum of Economic and Financial Policies with the government. After further consultations and agreement, the document will be signed by the finance minister and the State Bank governor.
According to sources, the IMF has asked the government to increase both tax and non-tax revenue. After increasing the levy on high-octane fuel, the government is now considering increasing the petroleum levy on petrol and diesel by Rs5 per litre.
The government has also taken the IMF into confidence regarding a Rs100 billion cut in the development budget.
Sources further said the IMF raised objections over giving the government authority to appoint heads of institutions. The IMF maintained that the appointment of CEOs and heads of institutions should remain with the boards of those institutions.
Pakistan has also shared a plan with the IMF to control circular debt in the electricity and gas sectors. The IMF is also reviewing the impact of regional tensions on Pakistan’s economy.
Increase in oil and fertiliser prices and the country’s difficult financial situation were also discussed. Meanwhile, proposals are under consideration to provide relief to the real estate and property sector. A proposal to reduce taxes on property buying and selling is subject to IMF approval.
The government is also considering incentives for overseas Pakistanis to increase investment in the real estate sector. The government has already approved a subsidised housing scheme for the construction of low-cost houses.