The IMF has agreed to reduce Pakistan’s tax collection target by Rs150 billion, according to official sources quoted by ARY News. The decision came after the Pakistani government convinced the IMF that recent floods had severely impacted economic activity and tax revenues.
Under the revised arrangement, the Federal Board of Revenue (FBR) target for the fiscal year 2025–26 has been lowered from Rs14,131 billion to Rs13,981 billion. Officials said this adjustment aims to create more realistic goals for revenue collection amid the ongoing recovery from flood-related losses.
Sources revealed that the FBR is already facing a shortfall of Rs199 billion in the first quarter of the current fiscal year. Earlier, Prime Minister Shehbaz Sharif had proposed a Rs250 billion cut in the tax target, but the IMF only approved a Rs150 billion reduction after negotiations.
Government officials stated that the main objective is to avoid new taxes while keeping fiscal targets achievable. They added that the reduction reflects Pakistan’s fragile economic conditions and the need to maintain growth stability.
In its recent Regional Economic Outlook report for the Middle East and Central Asia, the IMF highlighted that devastating monsoon floods have caused significant damage to Pakistan’s economy. The report said the floods have slowed growth, raised inflation, and widened the current account deficit.
According to the IMF, Pakistan’s GDP growth is projected at 3.6% for the current financial year, below the government’s 4.2% target. It warned that the losses in agriculture, infrastructure, and housing are likely to reduce income levels and push up prices.
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The IMF also cautioned that inflation could increase again in the coming months due to the end of power subsidies, tariff hikes, and supply disruptions. Food and energy prices are expected to be affected the most, posing fresh challenges for policymakers.
