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The International Monetary Fund (IMF) has decided to reject Pakistan’s plan to levy a one percent water storage tax on all taxable goods to raise revenue for mega dam projects across the country. According to reports, the international creditor has proposed that Pakistan raise funds for the development of dams by increasing the already high general sales tax (GST) rate, which currently sits at 18 percent.

As per reports, the federal government intended to impose a water storage tax to fund the development of Mohmand, Diamer-Bhasha and potentially Chenab Dam. However, this reportedly caused the IMF to highlight fiscal, legal and governance concerns.

Moreover, details from reports suggest that the fund was not in favour of “handing revenue control” to the Water and Power Development Authority (WAPDA). Instead, the IMF suggested that the government could either prioritise these development initiatives by funnelling funds from the Rs1 trillion allocated for development projects to the construction of dams or by increasing the GST.

It merits a mention that reallocating funds from the Public Sector Development Programme’s (PSDP) Rs1 trillion budget to fund dam projects could result in the neglect of a number of projects. Data from reports indicates that the revised cost for the Diamer-Bhasha dam alone could cost a staggering Rs1.1 trillion, a figure 10 percent larger than the entire PSDP budget.

This revised figure sits much higher than earlier estimates pegged the cost of the dam to be, sitting at just Rs479 billion. Moreover, with only Rs25 billion allocated to the dam, reports reveal that authorities are short of a whopping Rs365 billion on the original estimate. 

Similarly, the government needs Rs173 billion to cover the cost of the Mohmand dam, with Islamabad’s financial outlay for the project sitting at just Rs35.7 billion. Constructing the Chenab dam could cost the government another Rs220 billion.

Put together, these three development projects alone require a whopping Rs1.35 trillion in additional funding. However, reports suggest that the government may attempt to raise these funds without a hike in GST.

This could be possible if Islamabad amends the Gas Infrastructure Development Cess (GIDC) Act to funnel unspent funds from collections into dam projects. While the construction of the dam could help safeguard Pakistan from water-related natural disasters and assist the agricultural sector, it could serve to exacerbate the surplus power issue.

In a bid to deepen bilateral ties, more than 65 US-based companies participated in a webinar on Wednesday aimed at uncovering business prospects at Pakistan’s ports, namely Port Qasim and Karachi Port.

Organised under the ‘Gateways to Growth: South Asia Port Opportunities’ series, the session was reportedly a joint effort by the US Department of Commerce’s International Trade Administration and the US Department of State, in partnership with Pakistan’s Ministry of Maritime Affairs. According to reports, the event has opened up fresh avenues for American commercial engagement in Pakistan’s port and maritime sectors.

Reports reveal that the webinar was designed as a strategic meeting ground facilitating direct conversations between US businesses and key figures from Pakistan’s port authorities and private port operators.

Key officials from the Ministry of Maritime Affairs, Abu Dhabi Ports, Dubai Ports World and Port Qasim Authority, also participated. It merits a mention that Abu Dhabi Ports manages Karachi Gateway Terminal Ltd, while Dubai Ports World operates Qasim International Container Terminal. These entities, along with the Ministry of Maritime Affairs, laid out Pakistan’s trade priorities, infrastructure goals, and the broader regulatory framework.

Speaking during the session, US Consul General in Karachi Scott Urbom reportedly highlighted the strength of bilateral cooperation. The Consul General mentioned that investors from the US have already contributed significantly towards the development of the country. He also announced that the Port sector could serve as an area of economic collaboration, bringing about “great success” for all parties involved.

Moreover, he suggested that collaboration could unlock the port sector’s true capacity, create fresh openings for US-based firms, and support Pakistan’s economic progress.

As per reports, Director of ICT and Infrastructure Policy at the US International Development Finance Corporation, Ean Hudley, explained that this initiative gives US businesses valuable market insight and direct connections to local decision-makers, allowing US firms to tap into infrastructure ventures throughout South Asia.

The hybrid event reportedly outlined how US firms can play a vital role in accelerating trade movement by building new logistics channels between the two nations, aligning with Pakistan’s ongoing development plans for its ports.

In recent port-related developments, the Ministry of Maritime Affairs has outlined plans to increase the number of shipping lines operating to and from the port and has also announced the launch of a ferry service. The initiative is part of the federal government’s plan to elevate Gwadar Port’s position as a “major hub in the Arabian Sea”.

While the government attempts to boost Gwadar Port’s significance, investment inflows from the US into Port Qasim and Karachi Port could allow Pakistan to begin a regional trading hub.

Pakistan plans to partner with El Salvador, the first country to use cryptocurrency as legal tender, to join the digital currency race and work together to promote crypto use, according to reports.

Pakistan Crypto Council’s (PCC) chief executive officer (CEO) Bilal Bin Saqib met with El Salvador’s President Nayib Bukele. According to a statement from Prime Minister Shehbaz Sharif’s office, the two sides discussed forming a partnership to exchange knowledge on digital assets.

Collaboration with El Salvador could yield positive results for Pakistan, as the South American country adopted Bitcoin as legal tender in September 2021. While it rolled back Bitcoin’s status as legal tender in January 2025, Pakistan could benefit from the knowledge El Salvador gained during its three-year “experiment”, regarding the integration of digital assets into the national economy while on an International Monetary Fund (IMF) program.

Like El Salvador, Pakistan remains under the IMF’s Extended Fund Facility (EFF) program. However, while El Salvador has made notable progress in embracing digital assets, Pakistan has only recently stepped into the space with the PCC in March 2025. Given El Salvador’s experience navigating similar economic and technological transitions, Pakistan stands to gain significantly from knowledge sharing and collaboration.

El Salvador’s President has been attempting for years to establish his country as a hub for digital assets. Reports suggest that the issuer of the most renowned stablecoin in the country, Tether Holdings SA, also recently established its headquarters.

Despite being mandated by the IMF to stop acquiring Bitcoin as per a loan agreement, El Salvador continues to purchase the digital asset. Data from reports suggests that the country now boasts an impressive collection of 6,238 Bitcoins in its reserves, valued at approximately $738 million as of publishing.

Pakistan has taken steps to establish itself as a digital asset hub as well, creating the country’s first-ever government-led Strategic Bitcoin Reserve. The PCC’s CEO recently outlined Islamabad’s intentions, indicating that holding digital assets by the state signalled a long-term belief in decentralised finance and was not for speculative purposes.

Islamabad recently allocated 2,000 megawatts of surplus power to crypto mining and to power artificial intelligence data centres. While initial reports suggested that, similar to El Salvador, the IMF disagreed with the aforementioned crypto-related initiative, Pakistan’s Power Division and the IMF jointly rubbished these claims as no formal objection had been logged by the international lender.