The International Monetary Fund (IMF) has conditionally agreed to Pakistan’s Circular Debt Management Plan, linking its approval to the imposition of a debt servicing surcharge (DSS) of Rs 2.8 per unit on electricity consumers.
According to sources, the government has proposed a strategy to reduce circular debt by Rs 1,250 billion, which includes borrowing from banks at an interest rate of 10.8%. The loan will be repaid by imposing the surcharge on consumers.
IMF opposes tax exemptions for foreign investments
Meanwhile, the IMF has urged Pakistan’s Special Investment Facilitation Council (SIFC) to refrain from granting tax exemptions to international investment projects, including the $2 billion Chaghi-Gwadar railway track project. The IMF argues that such exemptions would hinder the country’s revenue generation.
The SIFC has been working to attract foreign investment and facilitate mineral transportation from Reko Diq to Gwadar through a new railway line. However, the IMF has declined to allow tax exemptions for international investors.
The government now faces the challenge of balancing IMF conditions while ensuring investment growth and economic stability.__The Nation
