No cheap contraceptives as IMF turns down request to abolish 18% GST

• PM Shehbaz directed FBR to approach IMF on contraceptives.
• No immediate possibility of reduction in prices after IMF refusal.
• Relief can encourage smuggling to complicate enforcement: lender.

ISLAMABAD: Despite having one of the highest population growth rates in the world and clear directives from Prime Minister Shehbaz Sharif, the International Monetary Fund (IMF) has refused to grant permission to abolish the 18% General Sales Tax (GST) on contraceptives immediately, The News reported on Thursday.

As a result, condoms will remain expensive in the country. The IMF has flatly rejected the Federal Board of Revenue's (FBR) proposal and stated that such issues can only be discussed in the upcoming budget.

Top official sources told the publication that the IMF has outrightly turned down the FBR's request to withdraw GST on contraceptives, effectively blocking the prime minister's August 2025 instruction to make birth control products affordable and widely accessible across the country.

There is, therefore, no immediate possibility of reducing the prices of condoms, despite Pakistan's surging population.

They said the prime minister had directed the FBR in August 2025 to take up the matter with the IMF, but months of engagement yielded no breakthrough. During a recent meeting at the PM Office, it was disclosed that the FBR had failed to secure the IMF's consent despite repeated attempts.

According to officials, the FBR formally approached the IMF's headquarters in Washington via email, seeking deliberation on abolishing GST on contraceptives.

The FBR estimated the revenue impact of the proposed relief at Rs400 to 600 million, but the IMF's Fiscal Affairs Department showed little appetite for the proposal.

A virtual meeting was subsequently held, in which Pakistani authorities conveyed the prime minister’s wish to abolish GST on condoms with immediate effect. The IMF side rejected the demand, stating that no tax relief could be granted midway through the fiscal year, particularly when the FBR was already struggling to meet its revised revenue target of Rs13.979 trillion — down from Rs14.13 trillion — for the fiscal year 2025–26.

IMF staff in the closed-door discussion made it clear that any such tax relief could only be considered in the next budget for 2026-27.

The Pakistani side also raised proposals to reduce GST on sanitary pads and baby diapers. However, officials said the IMF strongly opposed these measures as well, citing the large revenue stakes involved, particularly in baby diapers where the tax base runs close to Rs100 billion.

The IMF further argued that granting tax relief on contraceptives or diapers could complicate enforcement for the FBR by encouraging smuggling of these items, the sources added.

As there is no officially notified spokesperson at the FBR, the formal position on the IMF's refusal could not be obtained.

Pakistan's population growth rate currently stands at a staggering 2.55% — among the highest globally — with nearly six million people added to the population every year, underscoring the widening gap between stated policy intent and fiscal decision-making.