Reports of petroleum levy being 'central point' in IMF programme are 'misleading': finance ministry

Reports of petroleum levy being 'central point' in IMF programme are 'misleading': finance ministry.

Key points

• News Desk Published September 22, 2026 Updated September 22, 2026 09: 47pm.
• The programme includes a $7 billion Extended Fund Facility (EFF) and a $1.1bn Resilience and Sustainability Facility (RSF).
• Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and throughout the world.
• The inference was created in connection with a statement by Planning Minister Ahsan Iqbal.
• According to The ministry additionally, agriculture-related commitments were not exclusively with the Finance Division.

News Desk Published September 22, 2026 Updated September 22, 2026 09: 47pm. Join our Whatsapp Channel. Add Dawn as a trusted source.

For context, the finance ministry issued a rebuttal on Tuesday, saying that reports of the petrol development levy (PDL) being a "central point" of Pakistan's ongoing programme with the International Monetary Fund (IMF) were "misleading".

Meanwhile, the programme includes a $7 billion Extended Fund Facility (EFF) and a $1.1bn Resilience and Sustainability Facility (RSF).

Although there is no explicit condition in the IMF document regarding the rate of the levy, on Tuesday, an Express Tribune report remarked the "finance ministry had produced petroleum levy the central point of the programme. Consequently, the administration has managed to improve fiscal numbers but it fueled inflation, unemployment, poverty and low economic expansion".

Notably, the finance ministry, referring to the report in an official note, termed the assertions "misleading" and remarked the programme's fiscal strategy was "substantially broader and revolves around FBR revenue mobilisation, expansion of tax base, provincial taxation, expenditure rationalisation etc".

For FY27, the ministry remarked, the programme specifically emphasised further revenue mobilisation and strengthening FBR performance rather than relying solely on petroleum taxation.

"PDL is one of the revenue instruments and describing it as center piece of program materially overstates its role, " the ministry remarked.

It additionally argued that the assertion of there being "no IMF conditionality relating to petroleum levy pricing" was "technically narrow and potentially misleading".

While the programme does not prescribe a single permanent headline PDL rate in the manner suggested, published programme documents contain explicit details concerning petroleum pricing and levies. These include alignment of domestic fuel rates with international costs through regular adjustments. The RSF additionally included a specific reform measure introducing a supplementary carbon levy through the PDL framework.

"Thus, petroleum pricing policy forms part of the agreed programme framework, rather than being a unilateral fiscal strategy developed solely by the Finance Division, " it remarked.

For context, the ministry additionally took exception to the linking of inflation, unemployment, poverty and low economic expansion to the levy and noted the assertion was "analytically incorrect and attributes broad macroeconomic outcomes to a single fiscal instrument".

"Pakistan's inflation and growth outcomes reflect multiple factors, importantly prevailing geo-political situation along with domestic and international commodity prices, exchange-rate movements, monetary conditions, fiscal imbalances, external financing constraints and global shocks, " it continued.

Moreover, the ministry remarked, the report mentioned that it had kept "tight control" over the IMF programme's design and negotiations, "which caused problems such as commitments about the agriculture sector and focusing too much on fiscal stabilisation".

Meanwhile, the inference was created in connection with a statement by Planning Minister Ahsan Iqbal. This person was quoted as saying that he had "recommended to the prime minister that a representative of the Planning Commission should also be included in the team that will negotiate with the IMF".

But, the programme was a "whole-of-government programme, not a Finance Division programme", it remarked in its rebuttal.

In practice, the assertion did "not accurately reflect the institutional arrangements underlying Pakistan's IMF programme. IMF's EFF and RSF facilities encompass reforms and commitments falling within the mandates of multiple federal and provincial institutions, including Finance Division, Planning Commission/ Ministry of Planning, Ministry of Energy, provincial governments, Federal Board of Revenue, State Bank of Pakistan and other relevant stakeholders".

For context, the relevant ministries and institutions participated and led technical discussions, including benchmarks setting relating to their respective mandate, the ministry remarked.

Seemingly referring to the conclusion derived in The Express Tribune 's report that there had been "criticism from government circles and independent experts about viewing the financing facility only in relation to fiscal numbers", the ministry remarked the programme was "demonstrably not confined to numbers or fiscal targets".

The Finance Division fully recognised that macroeconomic stabilisation was a means towards sustainable and inclusive economic expansion. Even, the published IMF programme explicitly encompasses growth-enhancing structural reforms, social protection, governance, energy sector efficiency, climate resilience and reduction of distortions in economy.

"The latest IMF staff report specifically states that policy discussions focused on accelerating reforms to support stronger growth, while protecting vulnerable households, " it argued.

Notably, the ministry additionally contended that fiscal stabilisation could not be separated from expansion.

Pakistan entered the programme with limited fiscal and external buffers and significant financing requirements. Restoring fiscal sustainability, rebuilding reserves and reducing refinancing risks are necessary conditions for durable private investment and expansion.

"The IMF's third-review documents record that fiscal consolidation contributed to reducing macroeconomic imbalances and demand pressures, supported disinflation, and external-sector stabilisation through reserve build-up and recovery in overall growth numbers, " it remarked.

In practice, the ministry additionally asserted that it has not pursued fiscal consolidation without social safeguards, and backed the programme to incorporate explicit floors and commitments for social protection.

Giving multiple examples in this connection, the ministry further stated that the latest targeted fuel-subsidy programme is another initiative to "protect vulnerable households through targeted, temporary and fiscally sustainable interventions, rather than untargeted subsidies that create large fiscal liabilities".

"Sovereign debt is contingent on fiscal imbalance, and in last financial year, debt growth has been limited to lowest levels in two decades, " it remarked.

"Agricultural income taxation, for instance, is constitutionally and administratively a provincial responsibility, and implementation necessarily involves provincial governments. Any assessment of these reforms should therefore distinguish between programme coordination by the Finance Division and constitutional/ administrative responsibilities of the relevant governments and institutions."

It concluded its statement saying that a "clear distinction needs to be maintained between the Finance Division's responsibility for overall programme coordination, and agreement on benchmarks with the IMF leading to policymaking, legislative and implementation responsibilities of respective federal ministries and provincial governments".

"The appropriate policy debate is therefore not 'stabilisation versus growth', but how to transition from stabilisation towards sustainable growth without any fiscal and external imbalances that necessitated reverting to IMF stabilisation programmes, as witnessed in the past, " it remarked.

For now, reports of petroleum levy being ' central point' in IMF programme are ' misleading' : remains the part of the story worth watching, and further updates are likely as more details are confirmed.