Pakistan Government Urges Imf To Reduce Tax Collection Target

As of March 1, 2026, the Pakistani government is poised to request the International Monetary Fund (IMF) to reduce its tax collection target for the fiscal year 2025-26 by PKR 250 to PKR 300 billion due to a staggering PKR 430 billion shortfall in tax revenue during the first eight months of the fiscal year. The Federal Board of Revenue (FBR) reported that it collected PKR 8.12 trillion against a target of PKR 8.55 trillion, reflecting a significant gap exacerbated by slowing economic activity and policy constraints. The IMF is currently in Islamabad for a key review under Pakistan's $7 billion Extended Fund Facility, with tax collection being a critical topic of discussion. "If the shortfall persists, the government may request a downward adjustment in the annual tax target," officials indicated, highlighting the urgent need to align targets with current collection trends to maintain fiscal balance. The FBR's efforts to address the shortfall included extending working hours for tax offices, yet February's collections fell short by PKR 85 billion against a monthly target of PKR 1.03 trillion, raising alarms about the sustainability of public spending and development programs.