ISLAMABAD: Pakistan has submitted a backup fiscal plan to the International Monetary Fund (IMF) to avoid a mid-year mini-budget amid emerging revenue shortfalls, according to documents reviewed by the Fund.
The IMF report indicates that the Federal Board of Revenue (FBR) may fall short of its annual revenue target, prompting the government to propose preemptive corrective measures ahead of the December 2025 revenue review.
To address potential shortfalls, the government has assured the IMF that it is prepared to implement new taxation measures and enforce strict expenditure controls if collections remain below projections.
The contingency plan includes several steps to boost revenue:
- Increasing excise duty by 5% on fertilizers and pesticides.
- Introducing new taxes on high-value sugar products to broaden the tax base.
- Considering an 18% sales tax on selected items currently taxed at reduced or zero rates.
Officials expect these measures to help mobilize additional revenue in the second half of the fiscal year.
Alongside new taxes, the government has outlined plans to reduce non-essential spending if revenue pressures persist.
The IMF emphasized that Pakistan’s willingness to take early corrective action will be critical for maintaining fiscal discipline and meeting quarterly performance criteria under the ongoing program.
The government also reaffirmed that raising the tax-to-GDP ratio to 15% remains a long-term priority under IMF-supported structural reforms aimed at restoring fiscal sustainability.
