Pakistan’s parliament has approved new financial measures to raise additional taxes to meet a key condition by the International Monetary Fund (IMF) to revive a stalled six-billion-dollar bailout package.
The approval by the country’s National Assembly late on Thursday came after the military-backed coalition government of Prime Minister Imran Khan won back the support of its allies following several weeks of bickering.
The new law envisaged ending tax exemptions on several consumer goods, including baby formula and groceries to help the government collect 1.93 billion dollars in additional revenue yearly.
Pakistan’s opposition parties and economic experts said the move would trigger a new wave of inflation in the country where the annual rate of price hike was already in double digits, one of the highest in the world.
Pakistan secured the bailout package in 2019, to avert a balance of payment crisis, but the loan was suspended twice after the payment of only three tranches.
A sum of 500 million dollars was paid in 2021 before the latest suspension due to Pakistan’s failure to implement an economic reform agenda.
An executive board of the Fund was scheduled to meet by the end of the month to approve a one-billion-dollar tranche for Pakistan.
The development was seen as a vital boost for Pakistan to revive its crumbling economy.