The Federal Board of Revenue (FBR) is grappling with a massive revenue shortfall of Rs468 billion in the first seven months (July–January) of the current fiscal year (2024-25). Against the assigned target of Rs6,964 billion, the FBR has managed to collect Rs6,496 billion, reflecting a widening gap in tax revenue collection.
Revenue Collection Breakdown
- January 2025:
- Collection: Rs872 billion
- Target: Rs956 billion
- Shortfall: Rs84 billion
- Month-on-month growth: 29%
- First Half (July–December 2024):
- Shortfall: Rs384 billion
- Widened to Rs468 billion after January
Concerns Over IMF Program
The revenue shortfall is particularly significant ahead of the IMF’s upcoming review mission in February or March 2025. The FBR’s indicative revenue target for March 2025 is set at Rs9,168 billion, meaning it must collect Rs2,772 billion in the next two months (February & March) to stay on track with IMF requirements.
For the full fiscal year, Pakistan and the IMF agreed on a target of Rs12,970 billion (IMF’s figure: Rs12,913 billion). Given the current Rs6,496 billion collection, the FBR now needs to collect Rs6,474 billion in the next five months (Feb–June 2025) to meet this target.
Challenges & Government Response
- Debt Servicing Relief: The Ministry of Finance argues that reduced policy rates (from 22% to 12%) have helped ease fiscal pressures.
- Banking Sector Taxation: The FBR has collected Rs72 billion from banks through a 44% fixed tax rate on profits.
- Pending Refunds: The FBR has paid Rs272 billion in tax refunds in the first six months of FY25, which impacts net revenue collection.
Outlook & IMF Concerns
- The IMF is expected to scrutinize the FBR’s performance, particularly as the shortfall has continued to widen monthly.
- The government may need to consider new revenue measures or tax enforcement strategies to bridge the gap before the June 2025 deadline.
The FBR’s final January figures are yet to be officially released, but it is estimated that revenue may slightly increase to Rs875 billion as late collections are accounted for.
