ISLAMABAD, Aug 25(ABC): The coalition government is likely to jack up the prices of petroleum products by a massive Rs20 per litre from September 1, in an attempt to revive the stalled $6 billion IMF bailout package, revealed sources privy to the matter on Thursday.
As per the letter of intent (LoI) the government sent to the IMF, it had written that a sales tax has been imposed on petroleum products. However, the sources said that the rate of sales tax is likely to be hiked from next month, Daily Jang reported.
In order to fulfil the pre-requisites of the IMF, the federal government is likely to abolish the sales tax exemptions on petroleum products for the agricultural sector from September 1, the sources added.
The authorities are mulling introducing 10.5% sales tax on petroleum products from October under the conditions set by the International Monetary Fund (IMF).
It is pertinent to mention that the government has already removed subsidies from petroleum products in line with an IMF agreement, triggering a wave of inflation.
IMF executive board meeting on August 29
On August 17, Finance Minister Miftah Ismail confirmed that the government has sent the letter of intent (LoI) back to the IMF after fulfilling the pre-requisites, paving the way for the executive board’s meeting.
In his conversation with journalists, the finance minister said that the document — received on August 12 — was sent to the lender after his and State Bank of Pakistan (SBP) Acting Governor Murtaza Syed’s signatures.
The development has paved the way for the IMF’s August 29 executive board meeting, where Pakistan’s request to approve seventh and eighth reviews and release a tranche of $1.17 billion under the Extended Fund Facility (EFF) will be taken up.