An International Monetary Fund (IMF) mission is scheduled to visit Pakistan in early May 2025 to finalise the budget for FY2025-26, including taxation measures and expenditure reductions, according to a report by The News.
While the exact dates of the visit are yet to be confirmed, the mission’s purpose is to discuss the next budgetary framework.
On Tuesday, the IMF and Pakistan reached a staff-level agreement on the first review of the economic program under the Extended Fund Facility (EFF) and a new arrangement under the Resilience and Sustainability Facility (RSF).
In related developments, the Fund has revised Pakistan’s tax collection target for the current fiscal year, lowering it from Rs12,970 billion to Rs12,334 billion.
The Federal Board of Revenue (FBR) is facing difficulties in meeting its March 2025 target, with estimates suggesting a shortfall of Rs100 to Rs150 billion.
Earlier, the FBR had set a target of Rs1,220 billion for March, but it appears unlikely to meet that goal.
One of the biggest challenges ahead for the government is setting the FBR’s revenue collection target for the next fiscal year. While the IMF’s original forecast for FY2025-26 was Rs15,070 billion, the target for the current fiscal year has been reduced, and the next year’s target might be lowered to Rs14,500 to Rs14,600 billion.
With a modest growth rate of 10 to 11 percent, FBR’s tax collection could reach Rs13,600 billion. The government will need to identify new areas to raise Rs1,000 to Rs1,200 billion to meet the required target.
Meanwhile, Prime Minister Shehbaz Sharif, during a cabinet meeting on Wednesday, praised the economic team for securing the IMF agreement, which includes a $1.3 billion Resilience and Sustainability Facility (RSF) alongside the $7 billion Extended Fund Facility, totalling $8.3 billion in support.
He acknowledged the sacrifices of the public, especially salaried workers, who contributed significantly to tax collection during this process. He also highlighted that the agreement was reached without the need for additional taxation measures, despite opposition predictions of a mini-budget.
The Prime Minister emphasised the importance of peace and counterterrorism efforts for Pakistan’s growth and development, stressing the need to support the morale of the country’s security forces.
In a related development, Federal Minister for Finance, Senator Muhammad Aurangzeb, indicated the possibility of Pakistan issuing Panda Bonds in Yuan this year to tap into China’s capital market. He said that while Pakistan has previously issued bonds in US dollars and Euros, now is the time to take advantage of the Chinese market.
Earlier this month, the IMF, announced on Wednesday that it had reached a staff-level agreement with Pakistan on the first review of its economic program under the Extended Fund Facility (EFF) and a new arrangement under the Resilience and Sustainability Facility (RSF).
The agreement included a new 28-month arrangement under the RSF, providing Pakistan with total access of approximately $1.3 billion (SDR 1 billion). Subject to IMF Executive Board approval, Pakistan will gain access to about $1.0 billion (SDR 760 million) under the EFF, bringing total disbursements under the program to around $2.0 billion.
