Govt likely to increase petroleum levy on IMF demand

The federal government of Pakistan is contemplating a hike in the levy on all petroleum products to fulfill a demand set by the International Monetary Fund (IMF) in the FY-2023-24 budget.

Govt likely to increase petroleum levy on IMF demand

Sources familiar with the matter have revealed that the Ministry of Finance has proposed an additional increase of Rs10 per litre in the levy rate. This adjustment aims to generate approximately Rs755 billion from this source during the fiscal year 2023-24. The current rate of the Petroleum Development Levy (PDL) stands at Rs50 per litre.

In the current fiscal year, the government had initially set a target of collecting Rs855 billion through the petroleum levy. However, during the first nine months of the fiscal year, the collection only reached Rs362 billion. To boost the petroleum levy, the Ministry of Finance plans to introduce amendments to the finance bill through parliament.

In parallel, the IMF has engaged in discussions with Pakistan ahead of the budget and has demanded a reduction in expenditures by both the federal and provincial governments, as per sources.

Furthermore, during pre-budget talks, the IMF has urged Pakistan to set the tax revenue target above Rs. 10,000 billion. Pakistani negotiators have assured the lender of fixing the Federal Board of Revenue (FBR) tax collection target at Rs. 9,200 billion in the budget. The IMF team has also called for significant cuts in expenditures of the federal and provincial governments and emphasized the need to curtail expenses and subsidies in the upcoming fiscal year’s budget.

Prime Minister Shehbaz Sharif has expressed optimism about finalizing a deal with the IMF this month. In an interview with Anadolu News Agency, he stated that his government has been able to tackle Pakistan’s challenges effectively with the support of its people and friendly nations. He added that they remain hopeful about the IMF program materializing and that the ninth review by the IMF will meet all terms and conditions, potentially bringing positive news in the near future.

Please note that the provided summary is based on the information given and should not be considered a comprehensive account of the events.