Prime Minister Shehbaz Sharif is considering a massive relief package worth between Rs1.5 trillion and Rs2 trillion aimed at reviving Pakistan’s industrial sector, and is expected to seek support from the International Monetary Fund (IMF) during a meeting next week in Davos, sources said.
The prime minister is scheduled to meet IMF Managing Director Kristalina Georgieva on Tuesday on the sidelines of the World Economic Forum in Switzerland. The meeting comes as the government explores ways to reverse rising unemployment and poverty following strict economic stabilization measures.
In May 2023, Shehbaz Sharif met Georgieva in Paris, where he pledged to steer Pakistan’s economy in the right direction and avert default. While the government succeeded in avoiding a default, critics argue that the resulting austerity measures led to the highest levels of unemployment and poverty in decades trends the prime minister now wants to undo.
The Ministry of Finance declined to comment on the planned meeting, while both the IMF and the Prime Minister’s Media Office also refrained from issuing any official response.
Sources said the proposed relief package has been prepared in consultation with the Special Investment Facilitation Council (SIFC), the business community, and the Ministry of Finance. The plan includes eliminating tax distortions that have emerged since 2013 and significantly reducing income tax rates for both firms and individuals.
According to officials familiar with the matter, the cost of the package could rise from Rs1.5 trillion to Rs2 trillion once additional components are included, depending on the final blueprint shared with the IMF. The private sector had earlier proposed tax reductions worth Rs975 billion to revive traditional industries.
Finance Minister Muhammad Aurangzeb and Finance Secretary Imdadullah Bosal are expected to accompany the prime minister to Davos. The inclusion of the finance secretary is considered unusual, as technical matters are typically handled later through IMF regional and country offices rather than during leadership-level meetings.
An official said it remains unclear how much immediate support the prime minister can secure from the IMF in a single meeting. However, a detailed assessment of the plan’s viability is more likely to take place during the third review talks of the ongoing $7 billion IMF bailout programme, scheduled for next month.
Over the past month, senior policymakers have publicly acknowledged concerns raised by the business community regarding high energy costs and excessive taxation. The proposed relief package may include the removal of super tax, provincial deemed income tax on real estate, and capital value tax on foreign assets — measures that have pushed the effective income tax rate to as high as 60 percent.
The plan also proposes reductions in corporate income tax, sales tax, and inter-corporate dividend tax. Officials estimate that a reduction in sales tax alone could result in a revenue shortfall of around Rs600 billion. However, the government believes these measures would boost domestic and foreign investment, accelerate economic growth, and eventually offset revenue losses.