The International Monetary Fund has proposed that Pakistan impose a general sales tax (GST) on petroleum products, alongside a suggestion to raise the levy to Rs70, as the two sides begin talks in Islamabad, Dawn News reported.

An IMF delegation led by Pakistan Mission Chief Nathan Porter arrived in Pakistan on Monday and engaged in technical discussions on the first day.

In September, the IMF’s Executive Board approved a new $7 billion, 37-month loan agreement for Pakistan that requires “sound policies and reforms” to strengthen macroeconomic stability. The approval released an immediate $1 billion disbursement to Islamabad.

The crisis-wracked South Asian country has had 22 previous IMF bailout programmes since 1958.

The news outlet while citing sources reported that officials from the Federal Board of Revenue, the finance ministry, the State Bank of Pakistan, and the energy ministry met with the IMF team. Discussions included strategies to meet FBR targets and reforms in the energy sector.

A proposal has been made to impose a GST on petroleum products, which currently stands at zero. A petroleum levy of Rs70 rupees per litre was being collected with the likelihood of it being further increased.

In July this year, the federal government revised the Rs80 per litre PDL to Rs70/ltr to fund the bailout package.

Discussions are also expected to focus on meeting the FBR targets and new tax measures.

The agenda includes external financing and talks would address the privatisation programme, including the potential privatisation of Pakistan International Airlines. It merits her mentioning that the IMF delegation would remain in Pakistan until November 15, during which they would receive a briefing on the economic performance for the first quarter.

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Sources within the finance ministry told the news outlet that the IMF delegation would not discuss the first review of the Extended Fund Facility programme as Pakistani officials prepare to provide a briefing on the economic performance during the first quarter of the current fiscal year.

Economic experts have criticised the ruling coalition led by the Pakistan Muslim League-Nawaz for failing to meet key revenue targets, raising concerns that the IMF may propose additional and potentially unpopular measures for the current quarter from October to December.

Former finance minister Miftah Ismail labeled the economic targets, particularly the FBR income goals, as “unrealistic,” citing a potential decline in revenue due to falling inflation rates, which have dropped to single digits.