Pakistan Hikes Tax On Luxury Goods And Services To Get IMF Deal

Faced with critically low foreign exchange reserves, the government has already halted most imports -- apart from food and pharmaceuticals -- but hopes to boost revenue with the broad tax hike.

Pakistan's parliament gave the go-ahead Monday for the government to raise taxes on a raft of luxury imports and services in a bid to unlock the next tranche of an International Monetary Fund (IMF) loan.

Faced with critically low foreign exchange reserves, the government has already halted most imports -- apart from food and pharmaceuticals -- but hopes to boost revenue with the broad tax hike.

Years of financial mismanagement and political instability have pushed Pakistan's economy to the brink of collapse, exacerbated by a global energy crisis and devastating floods that submerged a third of the country in 2022.

However, with an election due by the end of the year, the government is reluctant to be too harsh in case it is punished at the polls.