- IMF flags gap in FBR projections.
- UAE rollover still under negotiation.
- Spending cuts likely if revenues lag.
ISLAMABAD: Pakistan and the International Monetary Fund (IMF) on Tuesday began virtual technical discussions focusing on external financing arrangements and the Federal Board of Revenue’s ability to meet its revised tax collection targets for the remainder of the current fiscal year, The News reported.
The FBR team briefed the IMF at a technical level that they will be able to meet the tax collection target of close to Rs13,500 billion, against the revised target of Rs13,979 billion, in the current fiscal year.
However, the Washington-based lender raised questions and inquired how the FBR would achieve tax collection beyond Rs13,000 billion. The FBR made all-out efforts to convince the IMF it would inch closer to Rs13,500 billion by the end of June 2026.
The IMF has already revised downward FBR’s tax collection target from Rs14,130 billion approved by the parliament on the eve of the budget, but it was slashed to Rs13,979 billion. Now the FBR has pitched before the IMF that the tax collection would be touching Rs13,500 billion but it seems quite hard to convince the IMF on another revision in the current fiscal year because the IMF is projecting that the FBR’s collection could go up in the range of Rs13,000 to Rs13,200 billion maximum asking the question how this yawning gap will be bridged.
The Ministry of Finance, in such an emerging situation, will be left with no other option but to slash down its expenditures to stick to the target of fiscal deficit, especially the envisaged target of primary balance of 2.4% of GDP for the end of June 2026.
The FBR has envisaged a tax collection target of Rs1,366 billion for the ongoing month, and the tax machinery will have to struggle hard to cross the Rs1,300 billion mark by the end of March 2026. The FBR’s tax collection will prove a hard nut to crack with the passing of months, and the last quarter target will become more difficult to achieve, given the sluggish economic activities.
The FBR team, in its initial technical briefing, apprised the IMF that the tax machinery faced a shortfall of Rs428 billion in the first eight months of the current fiscal year and, in total, it is all set to touch the revenue collection mark of Rs13,500 billion in the remaining four-month period till the end of June 30, 2026.
On the issue of external financing for the current fiscal year, the Ministry of Finance high-ups briefed the IMF on the latest situation of rollover from the friendly countries and disbursements from multilateral and bilateral creditors in the current fiscal year.
The IMF raised the issue of a $2 billion rollover from the UAE, but there was no latest information being shared with the IMF. The IMF was assured that the negotiations are underway with the UAE authorities to get a rollover of at least one year.
The disbursements of multilateral and bilateral loans are on track. On refinancing from China, the IMF was briefed that Pakistan repaid a commercial loan to China with the hope that it would be refinanced within the ongoing fiscal year.
There is no possibility of launching a Eurobond/Sukuk bond in the current fiscal year. The IMF also sought clarity on the Panda bond, which was delayed for at least a few months.
