Pakistan, which has one of the highest population growth rates in the world along with high levels of inflation, will have to continue shelling out more money for contraceptives like condoms since the International Monetary Fund (IMF) has rejected a request by the Shehbaz Sharif government to slash GST rates.
According to Pakistan-based The News, condoms, which attract 18% GST, will remain expensive in Pakistan since IMF has firmly said no to the Federal Board of Revenue's (FBR) recent proposal.
It said that such measures should only be discussed in the upcoming budget.
But why is Pakistan listening to IMF? It’s because Pakistan is currently under an IMF bailout programme, which comes with strict conditions on taxes, spending and revenues.
According to the report, the FBR had reached out to the IMF at its headquarters in Washington via email, hoping for a GST relief on contraceptives.
It pegged the revenue impact of the relief at anywhere between PKR 400-600 million. It conveyed the wish of Shehbaz Sharif at a virtual meeting that followed.
However, the IMF rejected the demand, saying that tax reliefs are not possible in the middle of a fiscal year, especially at a time when the country is already struggling to meet its revised revenue targets.
The report said that IMF also rejected a proposal by Pakistan to cut GST on sanitary pads and baby diapers.
Pakistan’s population growth rate stands at a staggering 2.55 percent — among the highest in the world — with nearly six million people added each year, highlighting the growing disconnect between policy intent and fiscal decision-making.
Recently, the IMF imposed 11 new conditions on Pakistan under its $7 billion bailout programme to crack down on corruption. This took the total IMF compliance requirements on Pakistan to 64 over the last 18 months.
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