Pakistan’s citizens may have to pay additional taxation as a new carbon levy is anticipated following a USD 1.3 billion agreement with the IMF for climate change initiatives PTI reported citing official sources.
Alongside this, the IMF agreed to release approximately USD 1 billion as the second tranche of the previously agreed USD 7 billion loan.
“The IMF team has reached a SLA with the Pakistani authorities on the first review of the 37-month extended arrangement under the Extended Fund Facility (EFF), and a new 28-month arrangement under the IMF’s Resilience and Sustainability Facility (RSF) with total access over the 28 months of around USD 1.3 billion,” the Fund said in a statement.
The total IMF loan now amounts to USD 8.3 billion with this RSF arrangement. Upon approval from the IMF’s Executive Board, Pakistan would receive immediate access to approximately USD 2 billion to strengthen its balance of payment position.

The new agreement requires additional commitments from the tax-burdened population, including a new carbon levy, increased water rates, and liberalisation of the automobile sector. Dawn newspaper reports that a reduction in power rates is expected, funded by reallocating the existing petroleum levy.
Senior officials familiar with the SLA and MEFP indicated that the prime minister would announce an approximate Rs 7 per unit reduction in average electricity rates, effective from April 1, 2025.
The implementation of new measures – carbon levy, water pricing and automobile sector reforms – will commence from July 1, 2025. Fiscal consolidation will continue through reduced energy subsidies and controlled development spending.

IMF Approves $2 Billion for Pakistan Under Loan Programme | Dawn News English

Officials confirmed that whilst the government sought GST reduction on electricity, the IMF instead permitted the use of increased petroleum levy to offset power tariffs. A Rs 10 per litre increase in petroleum levy would provide approximately Rs 1.80 per unit relief.
The government has agreed to implement a carbon levy of Rs 3-5 per litre or equivalent on all hydrocarbons, including petroleum products and coal, with gradual increases planned. The revenue will fund climate-related initiatives.
Automobile sector trade tariffs will decrease from 10.5% to 6% by FY 2030, ending what both parties agreed was excessive protection. These measures require cabinet approval before implementation through the finance bill 2025-26.
The authorities aim to achieve an FY25 underlying primary surplus of 1% of GDP minimum, maintaining consolidation in FY26. The focus remains on revenue mobilisation, spending efficiency and tax base expansion.
Pakistan has committed to maintaining strict monetary policy to keep inflation within the SBP’s 5-7% target range and preserve foreign exchange market functionality while building reserves.
The RSF programme includes strengthening public investment processes, improving water resource management, enhancing disaster financing coordination, addressing climate-related risks, and promoting environmental-friendly transportation to reduce pollution impacts.