ISLAMABAD: The International Monetary Fund (IMF) has revised Pakistan’s Federal Board of Revenue (FBR) revenue collection target for the fiscal year 2025-26 to Rs. 13.98 trillion, down from the Rs. 14.30 trillion set in the federal budget. The revision comes during the IMF’s Second Review under the Extended Fund Facility (EFF), reflecting ongoing economic pressures and the government’s efforts to stabilize revenue.
The IMF acknowledged that Pakistan has made progress, with tax revenues at federal and provincial levels crossing 12% of GDP — a notable improvement compared to previous years. However, the original Rs. 14.3 trillion target was deemed overly ambitious due to slow economic activity, structural weaknesses in the tax system, and the pace of reforms.
The revised target of Rs. 13.98 trillion aligns more closely with current economic realities, while the IMF stressed the need for continued reforms to ensure long-term fiscal stability. Pakistan aims to gradually raise its tax-to-GDP ratio to 15%, a critical benchmark to reduce debt, enhance public investment in education, healthcare, and infrastructure, and strengthen financial credibility internationally.
The FBR has already launched several initiatives to boost revenue, including:
Aggressive tax audits to identify underreporting and tax evasion.
Digital invoicing and POS expansion to improve sales tax collection through real-time transaction monitoring.
Strengthened withholding tax enforcement, one of the country’s largest tax sources.
Public awareness campaigns encouraging more tax filings and compliance among businesses.
Physical monitoring of high-risk sectors such as sugar, cement, beverages, and tobacco through digital tracking and inspections.
To support these measures, the FBR is preparing a comprehensive compliance roadmap in coordination with the IMF, featuring clear timelines, priority actions, and a phased approach to implementing large-scale reforms. At least three priority reforms are expected to be fully implemented within the revised timeline.
While the IMF’s adjustment does not change tax rates, it signals intensified enforcement and a shift toward digital compliance. Non-filers and under-filers should anticipate stricter monitoring, while continued tax growth will determine future development spending in key sectors.
