The Finance Ministry has rejected reports that the Petroleum Development Levy (PDL) was the “central point” of Pakistan’s ongoing programme with the International Monetary Fund (IMF), saying that the reports are “misleading” and the claim overstated the levy’s role in the $7 billion Extended Fund Facility (EFF) and $1.1 billion Resilience and Sustainability Facility (RSF).
The ministry issued the rebuttal on Tuesday after a report claimed that it had made the petroleum levy the central point of the IMF programme despite the absence of an explicit condition on the levy’s rate, and linked the policy to inflation, unemployment, poverty and low economic growth.
Rejecting the claim, the Finance Ministry said that the programme’s fiscal strategy covered a wider set of measures, including Federal Board of Revenue (FBR) revenue mobilisation, expansion of the tax base, provincial taxation and expenditure rationalisation.
For fiscal year 2026-27, the ministry stated that the programme placed particular emphasis on additional revenue mobilisation and strengthening FBR performance rather than relying solely on petroleum taxation.
“PDL is one of the revenue instruments and describing it as the center piece of the program materially overstates its role,” the ministry said.
The ministry also challenged the claim that the IMF programme had no condition linked to petroleum levy pricing. It said that the absence of a single permanent headline PDL rate did not mean petroleum pricing was outside the programme framework.
It pointed to published programme documents that include alignment of domestic fuel prices with international prices through regular adjustments. The RSF also includes a reform measure for introducing a supplementary carbon levy through the PDL framework.
“Thus, petroleum pricing policy forms part of the agreed programme framework, rather than being a unilateral fiscal strategy developed solely by the Finance Division,” the ministry said.
The ministry also rejected the link between the petroleum levy and wider economic outcomes, saying inflation, growth, employment and poverty reflect several factors.
It cited the prevailing geopolitical situation, domestic and international commodity prices, exchange-rate movements, monetary conditions, fiscal imbalances, external financing constraints and global shocks as factors affecting these outcomes.
The ministry also disputed claims that it had maintained “tight control” over the IMF programme’s design and negotiations, after Planning Minister Ahsan Iqbal said that he had recommended including a Planning Commission representative in the team negotiating with the IMF.
According to the ministry, the IMF programme was a “whole-of-government programme, not a Finance Division programme”.
It stated that the EFF and RSF covered reforms and commitments involving the Finance Division, Planning Commission and Ministry of Planning, Ministry of Energy, provincial governments, FBR, State Bank of Pakistan and other institutions.
The relevant ministries and institutions, it added, participated in and led technical discussions and set benchmarks related to their respective mandates.
The Finance Ministry also rejected the suggestion that the programme focused only on fiscal numbers and said that the IMF framework included growth-enhancing structural reforms, social protection, governance, energy-sector efficiency, climate resilience and reducing economic distortions.
It also argued that fiscal stabilisation and economic growth could not be treated as separate objectives, pointing out that Pakistan entered the programme with limited fiscal and external buffers and significant financing requirements.
According to the ministry, restoring fiscal sustainability, rebuilding reserves and reducing refinancing risks were necessary for private investment and growth.
It added that the IMF’s third-review documents recorded that fiscal consolidation helped reduce macroeconomic imbalances and demand pressures, supported disinflation and external-sector stabilisation through reserve accumulation, while overall growth numbers recovered.
The ministry also said sovereign debt was linked to fiscal imbalance and claimed debt growth in the last financial year remained at its lowest level in two decades.
On agriculture-related commitments, the ministry said that these were not exclusively under the Finance Division. It said agricultural income taxation was constitutionally and administratively a provincial responsibility, meaning implementation involved provincial governments.
The ministry emphasised that the distinction should remain in place between the Finance Division’s role in overall programme coordination and the responsibilities of federal ministries and provincial governments for policymaking, legislation and implementation.
It said that the policy debate should focus on moving from stabilisation towards sustainable growth while avoiding the fiscal and external imbalances that had previously led Pakistan back to IMF stabilisation programmes.
