No cheap contraceptives as IMF rejects call to scrap 18% VAT.

• PM Shehbaz asked FBR to approach IMF for contraceptives.
• No immediate chance of price cuts after IMF refusal.
• Relief may encourage smuggling to complicate enforcement: lender.

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

As a result, condoms will remain expensive in the country. The IMF categorically rejected the Federal Board of Revenue’s (FBR) proposal and said such matters can be discussed only in the upcoming budget.

Top official sources told the publication that the IMF has categorically rejected the FBR’s request to withdraw GST on contraceptives, effectively blocking the prime minister’s August 2025 directive to make birth control products affordable and widely accessible across the country.

There is therefore no immediate scope for reducing condom prices, despite Pakistan’s growing population.

They said the prime minister directed the FBR in August 2025 to take up the matter with the IMF, but months of engagement did not yield a breakthrough. During a recent meeting at the Prime Minister’s office, it was revealed that the FBR has failed to secure the consent of the IMF despite repeated attempts.

According to officials, the FBR formally approached the IMF headquarters in Washington through email, seeking discussion on the removal of GST on contraceptives.

The FBR estimated the revenue impact of the proposed relief at Rs 400 million to Rs 600 million, but the IMF’s Fiscal Affairs Department showed little appetite for the proposal.

A virtual meeting was then held, in which the Pakistani authorities conveyed the Prime Minister’s desire to abolish the GST on condoms with immediate effect. The IMF side rejected the request, stating that no tax relief could be granted in the middle of the financial year, particularly when the FBR was already struggling to meet its revised revenue target of 13.979 trillion rupees – from 14.13 trillion rupees – for the 2025-26 financial year.

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 napkins and baby diapers. But officials said the IMF strongly opposed those measures as well, citing the high revenue stakes, particularly in baby diapers, where the tax base is close to Rs100 billion.

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

As there is no officially notified representative in the FBR, the official position on the IMF denial could not be obtained.

Pakistan’s population growth rate currently stands at a staggering 2.55% – among the highest in the world – with nearly six million people added to the population every year, highlighting the widening gap between stated political intentions and fiscal decision-making.