The International Monetary Fund (IMF) is considering reducing Pakistan’s tax collection target to less than Rs12.5 trillion, down from the original goal of Rs12.9 trillion, due to an economic slowdown and a significant shortfall in revenue collection so far. This reduction, however, would require the country to meet its targets for the remaining four months and partially recoup some of the shortfall, according to sources in the Finance Ministry.
Any decision to lower the tax target will depend on the government’s ability to cut expenditures, as the IMF’s primary goal is to maintain a Rs1.2 trillion budget surplus for the fiscal year. Discussions between the IMF and Pakistani officials are ongoing, with a potential reduction of Rs435 billion being explored, although no final decision has been made.
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The IMF has also requested projections on Pakistan’s circular debt for the 2025-26 fiscal year. The Power Division has assured the IMF that circular debt will remain below the agreed Rs2.429 trillion threshold this fiscal year.
The government has already faced a Rs606 billion shortfall in revenue during the July-February period and is exploring options such as reducing tax rates for certain sectors and recovering funds from court cases to meet its targets. Additionally, the Finance Ministry may make further cuts to the development budget to balance the shortfall.
