ISLAMABAD: Ahead of upcoming negotiations with the International Monetary Fund (IMF), Pakistan is preparing to seek a downward revision of the Federal Board of Revenue’s (FBR) tax collection target, contingent on cutting expenditures proportionally to preserve the agreed primary surplus.
Officials disclosed that proposals are being floated to divert resources from the Benazir Income Support Programme (BISP) towards flood-hit communities. However, uncertainty remains about how this can be implemented, particularly for existing beneficiaries already receiving installments.
Pakistan and the IMF are scheduled to begin the second review of the $7 billion Extended Fund Facility (EFF) in Islamabad on September 25. According to official sources, two options are under consideration: either reduce the FBR’s target if expenditures are trimmed or impose additional taxation measures to meet fiscal goals by June 2026.
The FBR is tasked to collect Rs3.023 trillion by the end of September 2025, though projections suggest a potential shortfall of around Rs100 billion due to slowing economic activity in the aftermath of devastating floods. Officials warned that without expenditure cuts or fresh revenue measures, fiscal pressure could intensify.
Meanwhile, Pakistan aims to maintain a primary surplus of 2.4 percent of GDP—equivalent to Rs3.17 trillion—this fiscal year. Inflationary pressures could complicate the situation despite slower GDP growth.
IMF’s Resident Mission Chief Mahir Binci said the review mission will evaluate budget allocations and emergency provisions for flood relief. He noted the IMF Board’s earlier approval of $1.4 billion under the Resilience and Sustainability Facility (RSF), conditional on successful EFF reviews.
