The International Monetary Fund (IMF) has agreed in principle to lower Pakistan’s tax collection target for the upcoming fiscal year by up to Rs. 250 billion, according to official sources. The revised target is expected to be set at Rs. 14,100 billion, down from the originally proposed Rs. 14,307 billion, as the government grapples with weaker-than-expected inflation and economic growth.
Sources told ProPakistani that the Federal Board of Revenue (FBR) convinced the IMF that the previous target was unrealistic given the current macroeconomic environment. Pakistan’s economic team argued that both GDP growth and inflation are trending below earlier projections, making it difficult to meet overly ambitious tax goals.
Despite this downward revision, Pakistan has assured the IMF that it will tighten federal spending and boost non-tax revenues to help bridge the fiscal gap.
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Relief for Low-Income Earners on the Cards
As part of the upcoming 2025-26 federal budget, the government is also working on a relief package for low-income individuals. One of the key proposals under discussion is to exempt annual incomes of up to Rs. 1 million from income tax. However, incomes above that threshold may be subject to new tax measures aimed at addressing shortfalls and meeting IMF benchmarks.
Budget Talks Enter Final Phase
Final discussions between the IMF mission and Pakistan’s economic team are scheduled for today. These talks will focus on finalizing the fiscal framework and key budgetary commitments for the next fiscal year.
With only weeks left before the federal budget is tabled, today’s negotiations are seen as critical for concluding the terms of Pakistan’s ongoing loan program and ensuring continued IMF support.
