Pakistan Keeps Pushing, IMF Says No to Condom GST Cut

Islamabad: The Government of Pakistan says that items related to family planning in the country are already becoming beyond the reach of common people. For this reason, there was a demand to remove the 18% GST imposed on condoms and other contraceptive products. The logic was that if the tax is removed, the prices will decrease and people will be able to buy these things more easily. The population of Pakistan is increasing rapidly, and the government has been calling it a big concern. 

Why did the IMF reject this demand of Pakistan?

The IMF made it clear that it is not easy to give tax exemption in the middle of the financial year during the current program. The IMF's stance has been that things like tax changes are usually done only at the time of the next budget. This means that Pakistan cannot provide relief by immediately removing 18% GST. The IMF's argument is also being accepted that Pakistan is already under pressure to meet the revenue target; hence, giving relaxation will affect government earnings. 

How did this proposal reach the IMF?

According to reports, Pakistan's Federal Board of Revenue (FBR) talked to the IMF about this exemption. Some reports said that the IMF's Washington headquarters was contacted via email and subsequent talks were held, but the IMF refused to accept the proposal.

What impact will this have on the government's plans?

In Pakistan, it was also raised at the level of Prime Minister Shehbaz Sharif that contraceptive products should be made cheaper so that more people can buy them. But this plan is currently stuck after the IMF said “no.” Its direct effect will be that there will be no immediate relief in the price of condoms and other contraceptives. 

What does it mean that condoms are not cheap?

After this decision, birth control-related products are likely to remain expensive in Pakistan. For those for whom pricing was already difficult, this could make things even tougher. It has also been raised in many reports that such steps affect not only procurement but also public health and family planning efforts. 

What are Pakistan's options going forward?

The line of the IMF is that if Pakistan has to make any change in tax, then it will have to be discussed in the next budget. This means that even if the government wants to, it will not be able to take the decision to remove GST immediately. Now it has to be seen how Pakistan presents this issue in its next budget and on what conditions the IMF approves it.