ISLAMABAD: The Petroleum development levy (PDL) would be increased by Rs50 till January 2023. This is what Pakistan has promised to the International Monetary Fund after reaching a consensus on the letter of intent (the document outlining the general plans of an agreement).

PDL of around Rs10 on petrol and Rs5 on diesel would be increased on September 1, sources told Aaj News, adding that that the levy will be increased by another Rs5.5 per litre in the coming months and by January 2023, the rate of levy will increase to Rs50 per litre on petrol and diesel.

The tax on petrol stands at Rs20 and Rs10 on diesel and kerosene as of July 31 with a target to collect Rs855 billion in the current financial year of 2022-23 in the form of petroleum levy.

The recent increase of Rs6.72 brought the fuel price to Rs233.91. The government had also increased the dealers’ margin (a cost incurred by them after import and transportation of fuel) to Rs7.

Earlier in the day, Finance Minister Miftah Ismail had announced that Pakistan has sent back the signed letter of intent to the International Monetary Fund (IMF).

The finance minister said that the letter was sent to the global lender after being signed by him and the acting governor of State Bank of Pakistan (SBP).

The minister described the development as “good news”. Increasing PDL was the last prior action the global lender wanted.

In the next phase, the IMF executive board meeting on August 24 will probably approve the issuance of a one billion dollar loan for Pakistan.

According to the Memorandum of Economic and Finance Policy agreed with the IMF, Pakistan has to implement 10 major targets, including additional taxes of Rs.350 billion, a gradual increase in petroleum levy to Rs.50 per litre and an increase in electricity and gas bills.

The sources said that giving full autonomy to the State Bank, the power to set interest rates on bank loans, dealing with federal deficits through provincial surpluses and determining the value of the dollar through the market were part of the conditions.

Similarly, the prices of petroleum products will be linked to the per barrel rate in the global market, the repayment of loans taken from banks will have to be ensured and the collection of the tax levied on the property sector will be monitored.