The federal government wants relaxations from the International Monetary Fund (IMF) to revive economic growth in the next budget 2026-27 (FY27), as policymakers look for fiscal space to reduce taxes, cut power tariffs, and stimulate investment, according to a news daily.
The thinking has gained traction amid growing criticism that the IMF’s Extended Fund Facility constrained growth by raising taxes and increasing electricity and gas tariffs, dampening economic activity.
The move comes as the government enters the third year of its tenure and aims to lift economic growth to 5-6 percent, with a renewed focus on investment, employment, and poverty reduction.
Prime Minister Shehbaz Sharif has directed the Ministry of Finance and the Federal Board of Revenue to work closely with the business community to attract both domestic and foreign investment.
Export-led growth has been identified as the top priority.
Officials are also exploring further reductions in power tariffs to improve industrial competitiveness, along with the possibility of offering tax incentives if sufficient fiscal space is secured.
Under a draft policy, the government has proposed reducing the super tax on the manufacturing sector.
The proposals also include raising the minimum income threshold and increasing the threshold for the 10 percent super tax from Rs. 500 million to Rs. 1.5 billion, while halving the rate over the next four years.
The government is also considering easing inflation to push for a reduction in the policy rate, making borrowing cheaper for businesses. Banks may also be given specific lending targets to improve credit flows to the private sector.
