IMF rejects tax relief on foreign investment projects
The International Monetary Fund (IMF) has turned down Pakistan’s request for tax exemptions on foreign investment projects.
During a detailed briefing to the IMF delegation, the Special Investment Facilitation Council (SIFC) argued that tax relief would help attract foreign investors. However, the IMF rejected the request, emphasizing the importance of fiscal discipline.
SIFC officials highlighted investment opportunities, governance structures, and infrastructure plans, with a key focus on a proposed railway project linking Chagai to Gwadar. This project aims to transport minerals from the Reko Diq mine to the port city, and Pakistani officials urged the IMF to permit tax exemptions for its development, citing its economic significance.
The feasibility study for the railway was conducted in collaboration with the Ministry of Finance and the Ministry of Railways. Officials noted that potential investors have requested state guarantees before committing funds. However, under the current IMF loan program, the government cannot provide such guarantees for all investments.
Meanwhile, the IMF has agreed in principle to a proposal for reducing electricity prices, with a final decision expected next month. Sources suggest that base tariffs may be lowered by Re1 to Rs2 per unit, with NEPRA and the Ministry of Energy authorized to adjust rates accordingly.
The IMF also raised concerns over delays in the privatisation of Distribution Companies (DISCOs), warning that improvements in the power sector would remain difficult without addressing their performance issues.
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