ISLAMABAD – Pakistan has informed the IMF that it may face difficulty meeting its tax revenue target this fiscal year. Officials cited reduced economic activity linked to rising global tensions in the Middle East.
According to sources, Pakistani authorities held virtual discussions with the IMF to explain the economic impact of recent geopolitical developments. The talks included a special session focused on the regional crisis and its possible effects on Pakistan’s economy.
Officials said global oil supply disruptions have created uncertainty in energy markets. These disruptions followed recent military tensions involving the United States, Israel, and Iran. As a result, Pakistan introduced measures to limit certain economic activities. These steps may slow economic momentum and reduce tax collection.
During the briefing, Pakistani officials told the IMF that these conditions could make it harder to reach the government’s revenue target. Despite the challenges, the government remains committed to maintaining economic stability.
Authorities also shared updated economic projections with the IMF. Pakistan’s economic growth is now expected to remain around 4 percent. Earlier projections estimated growth at about 4.2 percent for the current fiscal year.
Inflation is also likely to increase slightly. Officials warned that inflation could reach around 7.8 percent. The earlier forecast was about 7.5 percent. Higher global energy prices are one of the key factors behind this expected rise.
Energy costs have increased due to instability in the Middle East. These changes affect import bills and domestic price levels in Pakistan. Economists believe these pressures could continue if global tensions persist.
Despite the concerns, Pakistan remains optimistic about remittance inflows. Authorities told the IMF that remittances from overseas Pakistanis are still expected to meet annual targets. These inflows remain a key support for the country’s external finances.
Meanwhile, the government has introduced several austerity measures to control spending. Prime Minister Shehbaz Sharif recently announced a series of cost-cutting steps across federal and provincial departments.
Under the new plan, petrol use for official vehicles will be reduced by 50 percent for two months. However, ambulances and public transport buses will remain exempt from this rule.
In addition, about 60 percent of departmental vehicles will be temporarily removed from service. The government has also suspended purchases of new vehicles, furniture, air conditioners, and other non-essential items.
Further steps include salary cuts for government officials. Federal ministers, advisers, and special assistants will give up their salaries for the next two months. Members of Parliament will face a 25 percent pay reduction.
Senior government officers earning above Rs300,000 will also contribute two days’ salary. These funds will support public relief initiatives.
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Officials say these measures aim to manage economic pressure while maintaining cooperation with the IMF and ensuring financial stability.
