Pakistan Denied GST Relief On Condoms By IMF Despite Population Boom

The International Monetary Fund (IMF) has declined Pakistan's request to immediately scrap the 18 per cent General Sales Tax (GST) on contraceptives, dealing a blow to the government's push to make birth control more affordable in a country with one of the world's fastest-growing populations.

According to the IMF, any exemption or tax cut on contraceptives can only be examined during the next federal budget cycle, particularly as Pakistan struggles to meet revised revenue goals under the ongoing bailout programme. The lender cautioned that such tax relief could weaken enforcement mechanisms and increase the risk of smuggling.

Pakistan's Federal Board of Revenue had approached the IMF at its Washington headquarters through email correspondence and a virtual meeting, proposing a GST exemption that would have reduced revenues by an estimated PKR 400-600 million. The request was ultimately rejected.

The IMF also opposed similar proposals seeking tax relief on sanitary pads and baby diapers.

These decisions come as Pakistan faces an acute demographic challenge. With a population growth rate of about 2.55 per cent, the country adds nearly six million people every year, intensifying pressure on public services and household incomes.

Pakistan remains under an IMF bailout programme that imposes strict conditions on taxation, spending and revenue collection. So far, the IMF has disbursed roughly $3.3 billion, with another $1.2 billion approved subsequently.

Islamabad had maintained that the 18 per cent GST, introduced through successive "mini-budgets" to meet IMF-mandated revenue targets, has pushed essential reproductive health products out of reach for millions of low-income households by effectively treating them as luxury goods.

At the same time, Pakistan is moving ahead with the privatisation of its national carrier, Pakistan International Airlines, a step widely seen as part of broader efforts to comply with IMF conditions and reduce the state's mounting fiscal burden.