ISLAMABAD: In ongoing virtual talks, Pakistan and the International Monetary Fund are close to agreeing on a revised macroeconomic and fiscal framework for the current fiscal year, with the Federal Board of Revenue’s tax collection target expected to be reduced to Rs13.45 trillion by June 2026.
The government had initially set the FY26 tax collection goal at Rs14.13 trillion through parliamentary approval. That target was later reduced to Rs13.97 trillion with IMF consent, and discussions are now underway to revise it further to around Rs13.45 trillion.
Under the revised framework, the FBR is projected to achieve a tax-to-GDP ratio of about 10.6% by the end of the fiscal year, compared with 10.3% recorded in June 2025. The original target agreed with the IMF for FY26 was a tax-to-GDP ratio of 11%.
During the first eight months of the fiscal year, the FBR recorded a revenue shortfall of about Rs428 billion against its revised target.
Based on current projections, one percent of GDP is estimated at about Rs1.269 trillion, which places the expected revenue collection close to Rs13.45 trillion if the tax-to-GDP ratio reaches 10.6%.
Officials said the Ministry of Finance will need to adjust government expenditures to keep fiscal deficit and primary surplus targets aligned with commitments under the IMF programme.
The two sides have also reviewed the broader macroeconomic outlook. Pakistani authorities maintained that real GDP growth could reach around 4% during the current fiscal year due to improved economic activity in the early months. Earlier projections by the IMF had placed growth at about 3.2% following the impact of major floods.
Inflation measured through the Consumer Price Index is now expected to average between 7% and 7.5% for FY26. The Ministry of Finance had earlier estimated inflation in the range of 5% to 7%, but recent increases in global fuel prices linked to geopolitical tensions in the Gulf region have added pressure to prices.
On the external front, the State Bank of Pakistan has continued purchasing dollars from the open market to strengthen foreign exchange reserves.
Officials said the external sector remains under pressure due to developments in the Middle East, although the current account deficit is still expected to remain within the projected range of zero to one percent of GDP for the fiscal year.
