Pakistan Seeks IMF Approval for New Tax to Fund Jinnah Medical Complex | Latest 12 September 2025 News

Pakistan’s New Tax Plan, IMF Approval, and China Bonds: Full Details

On 12 September 2025, Pakistan formally requested approval from the International Monetary Fund (IMF) to introduce a new municipal tax in Islamabad. The government aims to raise PKR 213 billion through this tax to finance the construction of the Jinnah Medical Complex and Research Center. This ambitious project will feature a 1,000-bed hospital, advanced research facilities, and international-standard medical services. The government has set July 2028 as the target for completion, seeking to fill a major gap in the capital’s healthcare infrastructure.

Because the required funding is so large, the federal budget alone is not sufficient. The government has therefore proposed several alternative sources, including issuing Panda bonds in China, obtaining corporate social responsibility (CSR) contributions from state-owned enterprises, and reallocating funds from other development projects. For immediate needs, about PKR 30 billion will be released from the emergency contingency fund to start initial construction.

What Are Panda Bonds?

A bond is essentially a loan contract: a government or company borrows money from investors and promises to repay the principal plus interest on a set date. Panda bonds are bonds denominated in Chinese yuan and sold within China’s domestic market. If Pakistan issues Panda bonds, it will borrow directly from Chinese investors in yuan and repay the amount, with interest, at maturity.

What If Pakistan Fails to Repay?

Failure to repay a bond on time is called default, and it carries serious consequences:

Loss of investor confidence: Future borrowing becomes much harder and more expensive.

Higher interest rates: Any new loans will carry higher rates because of the perceived risk.

Legal action: Investors may pursue claims in international courts or financial tribunals.

Economic pressure: The national currency could weaken, inflation may rise, and overall economic stability could be threatened.

IMF Review

The IMF has requested detailed plans for the new tax before granting approval. An IMF mission is scheduled to visit Pakistan from 25 September to 8 October 2025 to review the country’s broader financial program and this specific proposal. Without IMF consent, the government cannot move forward, since Pakistan remains under an IMF-supported economic framework.

Significance and Challenges

The Jinnah Medical Complex is widely seen as a crucial step toward improving healthcare in Islamabad, where hospital capacity remains limited. However, the introduction of a new tax may face public resistance during a period of high inflation. To succeed, the government must ensure transparent tax collection, timely funding, and public trust.

If executed properly, the project could transform healthcare services and provide an economic boost. But delays, mismanagement, or repayment problems on Panda bonds could put the entire initiative at risk. For now, all eyes are on the IMF’s upcoming review and the government’s ability to deliver on this ambitious healthcare plan.