IMF Lowers Pakistan’s Tax Collection Target to Rs. 13.98 Trillion for FY26. The International Monetary Fund (IMF) has revised Pakistan’s tax collection target downward for the financial year 2025–26.
According to the IMF, the Federal Board of Revenue (FBR) is now expected to collect Rs. 13.98 trillion, instead of the Rs. 14.31 trillion target set in the federal budget.
This revision comes under the Second Review of Pakistan’s Extended Fund Facility (EFF) programme, released on December 11, 2025.
Why IMF Revised the FBR Target
The IMF acknowledged that Pakistan has made noticeable progress in tax collection over the past year.
Combined efforts by the FBR and provincial governments have pushed overall tax revenues above 12 percent of GDP.
However, the IMF believes the original target was too ambitious given current economic conditions.
The revised figure aims to keep revenue goals realistic and achievable.
IMF’s Long-Term Tax Vision for Pakistan
Despite lowering the target for FY26, the IMF stressed that Pakistan must continue expanding its tax base.
According to the report:
- The goal is to raise the tax-to-GDP ratio to 15 percent
- This would help reduce public debt
- More revenue would allow higher spending on education, health, and infrastructure
- Stronger tax performance would support long-term economic growth
In simple terms, better tax collection means less borrowing and more development spending.
Steps FBR Is Taking to Improve Tax Collection
The IMF report highlighted several key measures already in motion at the FBR.
These include:
- Increasing the number of tax audits
- Strengthening sales tax and withholding tax collection
- Expanding POS terminals and digital invoicing
- Running public outreach campaigns to encourage tax filing
- Using physical monitoring tools to track production of taxable goods
These steps are designed to reduce tax evasion and bring more businesses into the formal economy.
IMF-Backed Roadmap for Faster Reforms
To improve results, the FBR is now preparing a comprehensive compliance roadmap with IMF support.
This roadmap will:
- Set clear priorities
- Improve resource allocation
- Speed up implementation timelines
According to the IMF, the FBR plans to fully implement at least three priority reform areas under this roadmap in the near term.
What This Means for Pakistan’s Economy
The revised target does not signal weakness.
Instead, it reflects a pragmatic adjustment to current realities.
If reforms stay on track:
- Revenue collection can remain stable
- Investor confidence may improve
- Pressure on inflation and borrowing could ease
- Fiscal discipline can strengthen over time
The IMF’s message is clear.
Progress has started, but consistency matters more than targets on paper.
Conclusion
The IMF’s decision to lower Pakistan’s tax target to Rs. 13.98 trillion for FY26 is a course correction, not a setback.
With digital tools, stricter audits, and IMF-backed reforms, the FBR is expected to build a stronger and broader tax system.
