The International Monetary Fund has opposed the government’s proposed Rs115 billion relief package for the construction and property sectors, creating uncertainty over a key economic initiative announced in Budget 2026-27. The package was designed to stimulate investment, encourage property transactions and support broader economic activity through increased construction and development.
Under the proposed measures, the government planned significant reductions in taxes imposed on property transactions. The tax rate on property purchases for filers was proposed to be cut from 2.5% to 1.25%, while the tax on property sales for filers was set to decrease from 5.5% to 2.75%, offering substantial relief to buyers and sellers.
Government officials believe these incentives could revive the construction sector, which has strong links with dozens of industries including cement, steel, transportation and manufacturing. Policymakers also expected the package to generate employment opportunities, increase investment and accelerate economic activity across multiple sectors connected to housing and infrastructure development.
However, tax authorities indicate that the IMF has rejected the proposed reductions, raising concerns about whether the measures will ultimately be implemented. The Fund’s reservations have placed the government’s strategy under pressure and complicated efforts to use the property sector as a driver of economic growth.
In response, government officials have reportedly renewed discussions with the IMF in an effort to secure approval for the package. Authorities remain hopeful that the proposed incentives can be justified on the basis of their potential impact on employment creation, industrial expansion and revenue generation through increased market activity.
The outcome of these negotiations is expected to carry significant implications for investors, developers and the broader economy. A final decision will determine whether the government can proceed with its plan to revive the property market or whether it will need to revise its strategy in line with IMF requirements.