ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have reportedly reached an understanding on key fiscal targets and policy measures for the federal budget FY2026-27, marking an important step in the country’s ongoing efforts to stabilize the economy and meet reform commitments.
According to sources familiar with the negotiations, the upcoming federal budget is expected to be close to Rs18 trillion. While most budget-related discussions between Pakistan and the IMF have been finalized, virtual consultations between the Federal Board of Revenue (FBR) and IMF officials are continuing on proposals aimed at providing tax relief to the salaried class.
One of the major developments is the reported revision of the FBR tax collection target for the current fiscal year. Sources indicate that the target has been reduced for a second time, falling from Rs13.979 trillion to Rs13.005 trillion. For FY2026-27, the government is expected to set a new tax collection target of approximately Rs15.264 trillion as part of broader revenue enhancement efforts.
The proposed revenue structure includes Rs7.413 trillion from direct taxes, Rs4.727 trillion from sales tax collections, Rs1.651 trillion from customs duties, and Rs1.043 trillion through the Federal Excise Duty. The IMF has consistently urged Pakistan to expand its tax net and improve revenue collection mechanisms to strengthen fiscal sustainability.
The Petroleum Development Levy (PDL) is also expected to remain a significant contributor to government income. Sources suggest that the PDL collection target could rise to Rs1.727 trillion in FY2026-27, compared to Rs1.468 trillion during the current fiscal year. Meanwhile, non-tax revenue is projected at Rs2.768 trillion, while gas surcharge collections may contribute around Rs151 billion.
On the expenditure side, debt servicing continues to be the largest challenge for Pakistan’s finances. Total debt repayment and interest obligations are estimated at Rs7.824 trillion. This includes approximately Rs6.652 trillion in domestic debt servicing and Rs1.107 trillion for foreign debt repayments.
Sources further indicate that the government may introduce new taxation measures worth around Rs220 billion to achieve fiscal objectives agreed with the IMF. Revisions to income tax slabs for salaried individuals are also under consideration, with authorities examining options to provide relief to taxpayers in the formal sector.
The federal budget 2026-27 is expected to be presented in the coming days and will provide greater clarity on taxation policies, development spending, economic reforms, and Pakistan’s financial roadmap for the next fiscal year.
