Islamabad, Feb 23: The federal government is planning to introduce a carbon levy in the upcoming Budget 2025-26 and will seek permission from the International Monetary Fund (IMF) during an upcoming round of negotiations.
According to well-informed sources, initial discussions on the new tax regime will begin next week, as an IMF delegation arrives today for technical talks starting Monday.
Key Areas of Discussion
The IMF team will hold negotiations with federal and provincial representatives from February 24 to 28, focusing on:
- Carbon levy implementation
- Green budgeting
- Climate spending tracking & reporting
- Electric vehicle (EV) policies
- Subsidy frameworks
The IMF is also expected to recommend expanding green budgeting in Pakistan’s fiscal planning, ensuring better allocation of resources for climate-related initiatives.
This move aligns with Pakistan’s efforts to increase climate financing, reduce its carbon footprint, and meet international environmental commitments. However, the introduction of a carbon levy may face challenges, particularly from industrial stakeholders concerned about rising costs.
With Pakistan’s $7 billion IMF program currently under review and another IMF deal under consideration, fiscal and environmental policies are expected to remain a central focus of economic planning in the coming months.
