The International Monetary Fund (IMF) has reportedly urged Pakistan to raise an additional Rs. 430 billion in tax revenue to meet the revised target of Rs. 14.3 trillion for the upcoming 2025–26 federal budget, according to official sources familiar with the discussions.
This demand was put forth during the second round of virtual negotiations held between the IMF and Pakistan’s economic team. The global lender emphasized the critical need for Islamabad to implement urgent and comprehensive reforms aimed at significantly broadening the country’s narrow tax base and effectively resolving a substantial backlog of long-standing tax cases.
Furthermore, the IMF has reportedly advised the Pakistani authorities that a potential of Rs. 600 billion in revenue could be generated solely through intensified enforcement actions against tax evaders and non-compliant entities. The Fund also stressed the importance of bringing high-potential but currently under-documented sectors of the economy, such as tobacco, beverages, and real estate, into the formal tax net. Additionally, the IMF urged the Federal Board of Revenue (FBR) to implement significant improvements in its data collection methodologies, enhance automation of tax processes, and establish robust real-time monitoring systems to improve overall efficiency and revenue generation.
During the discussions, Finance Minister Muhammad Aurangzeb provided the IMF with a detailed briefing on Pakistan’s current economic outlook and the significant revenue challenges the country faces amidst a backdrop of low economic growth and persistent inflationary pressures. Current government estimates suggest that total tax revenue for the upcoming fiscal year could potentially be limited to approximately Rs. 13.275 trillion, falling short of the IMF’s proposed target.
The IMF also reiterated its long-standing demand for the timely resolution of numerous tax cases that are currently stuck in the judicial system. Moreover, the Fund emphasized the importance of Pakistan adhering to the agreed-upon primary balance targets under the ongoing Extended Fund Facility (EFF) program to ensure continued financial support and stability.
