The IMF refused immediate approval to remove the 18% GST on contraceptives. Officials said the decision keeps condom prices high. The IMF told Pakistan to raise the issue in the next budget.
Senior sources said the rejection blocks the prime minister’s August 2025 instructions. He wanted cheaper birth-control products nationwide. Officials said the FBR discussed the plan with the IMF for months. The talks produced no breakthrough.
Officials briefed the prime minister’s office in a recent meeting. They said the FBR could not secure IMF consent. They said the FBR contacted the IMF headquarters in Washington by email. The FBR asked the IMF to consider GST removal on contraceptives.
The FBR estimated a revenue impact of Rs 400 –600 million. Officials said the IMF showed little interest. Pakistani officials then held a virtual meeting with the IMF team. They repeated the request for immediate relief.
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IMF staff rejected the mid-year change. They pointed to the ongoing fiscal year. They also cited the FBR’s revenue pressure. Officials said the FBR targets Rs13.979 trillion for FY2025–26. The revised figure is lower than Rs14.13 trillion.
IMF staff told the Pakistani side to wait for the next budget. They said the discussion belongs in the FY2026–27 budget process.
Pakistani officials also raised GST relief for sanitary pads. They raised the same request for baby diapers. Sources said the IMF opposed both proposals. They cited large revenue stakes. Officials said diapers carry a tax base of nearly Rs100 billion.
Sources said the IMF also raised concerns about enforcement. They warned that tax relief could encourage smuggling. They said it could complicate compliance for the FBR.
The FBR did not issue an official public response. The agency has no spokesperson on notice, sources said. Pakistan’s population growth rate stands at 2.55%, officials noted. The country adds nearly six million people each year. Officials said the tax decision clashes with public policy goals.
