Pakistan seeks IMF approval for new tax to fund Rs213 billion Jinnah Medical Complex: report

Pakistan has sought approval from the International Monetary Fund (IMF) to impose a new municipal tax in Islamabad to finance the construction of the Rs213 billion Jinnah Medical Complex and Research Center. The IMF has requested additional details regarding the proposal, The Express Tribune reported.  

The government is under pressure to secure the necessary funds for the project, which is set to include a 1,000-bed facility with multiple medical centers of excellence, to be completed by July 2028.

As an alternative to the tax proposal, the government is considering tapping into the contingency pool of the national budget to release Rs30 billion immediately to kickstart the construction. 

Minister for Planning and Development, Ahsan Iqbal, stated that the Executive Committee of the National Economic Council (ECNEC) had formed a committee to explore alternative financing methods for the project. Iqbal confirmed that the government has already allocated Rs3.5 billion as initial seed funding for the project to establish the Jinnah Medical Complex Company and hire staff for its oversight.

The planning minister also mentioned that he would recommend financing the project outside the Public Sector Development Programme (PSDP) and stressed that additional funding would come from sources such as Panda bonds, corporate social responsibility contributions from state-owned companies, and Islamabad Capital Territory municipal taxes.

The Finance Ministry has proposed using Rs21.5 billion from the expected proceeds of Panda bonds for the Jinnah Medical Complex, but this has yet to be finalized. Meanwhile, the Health Ministry has submitted its plan to incorporate non-PSDP sources of financing, although these commitments are still pending.

The project has been tabled in the ECNEC meeting, but questions over how to mobilize the full Rs213 billion in the next three years remain unresolved. The Jinnah Medical Complex is planned as a 15-story high-rise near the new Islamabad International Airport, and its construction will take place in two phases. Phase I is expected to be completed within 30 months of receiving funding, while Phase II is slated for completion in two years.

Pakistan’s healthcare sector faces growing demands due to rapid population growth, especially in Islamabad, where the population has surged from 246,000 in 1984 to nearly 1.3 million today. The country’s average of five hospital beds per 10,000 people is significantly lower compared to neighboring countries, highlighting the need for expanded healthcare infrastructure.

The IMF is set to send a mission to Islamabad on September 25 to begin discussions for the release of a $1 billion tranche, contingent upon the completion of the second review of Pakistan’s economy. The IMF team will remain in Islamabad until October 8.