ISLAMABAD: The Federal Board of Revenue (FBR) has reported a Rs604 billion shortfall in tax collection during the first eight months (July-February) of the current fiscal year, raising concerns ahead of the upcoming IMF review mission scheduled for March 3, 2025.
With a revenue target of Rs9,168 billion agreed upon with the International Monetary Fund (IMF) for March 31, 2025, the FBR now faces the challenge of collecting Rs1,825 billion in March, a month impacted by Ramazan, holidays, and fewer working days leading up to Eidul Fitr.
Revenue Performance and Shortfall
The FBR has collected Rs7,343 billion so far, falling short of the Rs7,947 billion target for this period. If the current trend continues, Pakistan may miss its annual tax target by over Rs1 trillion by June 2025.
In February 2025, the revenue shortfall widened further, with the FBR collecting only Rs847 billion, against a target of Rs983 billion, resulting in a Rs136 billion deficit. The breakdown of collections for February includes:
- Income Tax: Rs347 billion
- Sales Tax: Rs367 billion
- Customs Duties: Rs106 billion
- Federal Excise Duty (FED): Rs65 billion
Government’s Next Steps
Pakistan’s economic managers now face two key options:
- Request the IMF to revise and lower the FBR’s tax collection target.
- Utilize available fiscal space from reduced debt servicing to keep the fiscal deficit within agreed limits.
The IMF’s review mission, arriving this weekend, will assess Pakistan’s fiscal performance before approving the release of the next $1 billion tranche under the $7 billion Extended Fund Facility (EFF). Additionally, Pakistan has requested an extra $1 billion under the Resilience and Sustainability Facility (RSF), aiming to increase the total loan package to $8 billion.
With mounting fiscal challenges, the upcoming negotiations with the IMF will be critical in determining Pakistan’s economic trajectory in the coming months.
