Pakistan's Bid To Make Condoms Cheaper Hit By Roadblock As IMF Refuses To Cut Tax

Pakistan's efforts to make essential health products more affordable have hit a roadblock. Prime Minister Shehbaz Sharif's government had sought approval from the International Monetary Fund (IMF) to remove the 18 per cent sales tax on condoms, sanitary pads, and baby diapers.

The IMF, however, has firmly rejected the request, saying such exemptions cannot be granted midway through the financial year. Any discussion on tax relief, it clarified, will only be possible during the next budget cycle in 2026-27.

Why the IMF Said No

Sharif had directed the Federal Board of Revenue (FBR) to formally approach the IMF months ago, hoping to ease the burden on consumers. But IMF officials stressed that Pakistan must stick to the strict conditions of its ongoing loan programme.

- Removing GST on condoms alone would cost the exchequer between Rs 400-600 million, according to FBR estimates.

- Pakistan is already struggling to meet its revised revenue target of PKR 13.979 trillion for the current year.

- The IMF warned that tax relief could weaken revenue collection and even encourage smuggling of such products.

As a result, contraceptives, sanitary pads, and diapers will continue to remain expensive, despite Pakistan's urgent need to promote family planning and women's health.

Pakistan's Economic Dependence

Pakistan's economy is currently propped up by IMF loans under a 37-month Extended Fund Facility, along with another programme aimed at climate resilience and long-term stability.

- So far, the IMF has disbursed USD 3.3 billion, with another USD 1.2 billion approved later.

- These loans come with tough conditions: stronger tax collection, governance reforms, and anti-corruption measures.

- Any deviation could push Pakistan toward financial default, global isolation, and severe instability.

This dependence leaves Islamabad with little flexibility to reduce taxes on everyday essentials, even when social needs are pressing.

Pakistan's population is growing at 2.55 per cent annually, adding nearly six million people every year. Affordable access to contraceptives and sanitary products is critical to managing this growth and improving public health. Yet, IMF restrictions mean the government cannot lower taxes on these items, leaving citizens to bear the brunt of high prices.

Privatisation of PIA

Alongside the tax debate, Pakistan is also moving ahead with the privatisation of Pakistan International Airlines (PIA), another IMF-linked reform.

- The bidding process is scheduled for December 23, with offers focusing on a 75 per cent stake and an option to buy the remaining 25 per cent later.

- Many bidders want full managerial control, pushing the government toward selling its entire 100 per cent stake.

- Among the four shortlisted bidders is the Fauji Fertiliser Company Limited, a military-run conglomerate linked to Army Chief Asim Munir, highlighting the military's deep involvement in Pakistan's economic affairs.