The International Monetary Fund (IMF) has rejected Pakistan’s request to reduce the tax on real estate transactions, sources who are familiar with the negotiations said Monday.

The rejection comes as Islamabad is struggling to meet the conditions for securing a staff agreement that would pave the way for further financial assistance.

According to sources, the IMF also refused to lower the withholding tax by 2% and rejected Pakistan’s request for tax relief of tobacco and beverages.

In addition, there was no agreement on relaxing Pakistan’s income target for March 2025, making it more difficult for the government to fulfill its tax obligations under the IMF program.

Pakistan will be obliged to provide additional warranties to end the staff level agreement, sources say. The IMF has also set a condition that prevents provinces from intervening in wheat outlets.

Meanwhile, the global lender has shown the will to incorporate climate financing into the program. According to the resilience and sustainability facility, Pakistan will be offered financial assistance to climate-related initiatives.

With the most important tax relief requests, Pakistan is facing additional pressure to implement tough fiscal measures. The government must now provide additional insurance policies to lock the next tranche of IMF financing.