IMF denies Pakistan's request for tax exemptions on foreign investment projects
Mar 12, 2025
Islamabad [Pakistan], March 12 : The International Monetary Fund (IMF) has turned down Pakistan's request for tax exemptions on foreign investment projects, as reported by the Express Tribune.
The Special Investment Facilitation Council (SIFC) proposed these exemptions during a detailed briefing to an IMF delegation, arguing that such tax relief could boost foreign investment. However, the IMF maintained its stance on fiscal discipline and turned down the request, the Express Tribune reported.
According to the Express Tribune, the briefing included presentations on investment opportunities, governance frameworks, and infrastructure development plans. One of the key highlights was a proposed railway project connecting Chagai to Gwadar, which aims to facilitate the transportation of minerals from the Reko Diq mine to the port city.
Pakistani officials emphasized the strategic importance of this project for economic growth and urged the IMF to approve tax exemptions for its development.
A feasibility study for the railway project was carried out in collaboration with the Ministry of Finance and the Ministry of Railways. Potential foreign investors, however, have requested state guarantees before committing funds. Yet, under the current loan agreement, the Pakistani government is unable to offer such guarantees for every investment project, the Express Tribune reported.
In other developments, the IMF has agreed to a proposal to lower electricity prices, with a final decision expected next month. The base tariff for electricity could potentially decrease by 1 Rupee to 2 Rupees per unit, with the National Electric Power Regulatory Authority (NEPRA) and the Ministry of Energy authorized to make adjustments, Express Tribune cited.
However, the IMF has raised concerns about the slow pace of privatization in Distribution Companies (DISCOs), emphasizing that progress in the power sector will be limited unless the performance of these companies is addressed.
The IMF's rejection of tax exemptions underscores its strong emphasis on fiscal discipline, prioritizing long-term economic stability over short-term incentives, ensuring that Pakistan maintains sustainable financial practices.
