2025–26 Budget
Pakistan has initiated preparations for its federal budget for the fiscal year 2025–26, with authorities already engaging in early consultations with the International Monetary Fund (IMF).
In a significant development, the government has shared detailed tax data with the IMF as part of the pre-budget groundwork. This move underscores Pakistan’s commitment to fiscal transparency and to securing continued support from the global lender amid ongoing economic challenges.
According to sources within the Ministry of Finance, the Federal Board of Revenue (FBR) has proposed a revenue target of Rs14,200 billion for the upcoming fiscal year. This ambitious target would represent 11% of Pakistan’s Gross Domestic Product (GDP), marking an increase from the current year’s tax-to-GDP ratio, which stands at 10.6%.
The proposal reflects the government’s intent to broaden the tax base and improve revenue collection as part of its economic reform agenda.
The proposed target, however, is yet to be finalized and will be a central point of discussion during the forthcoming negotiations with the IMF. Officials confirmed that both sides are already in contact via virtual platforms, and a visiting IMF delegation is scheduled to arrive in Pakistan from May 14 to May 22.
The delegation’s visit will focus on finalizing tax reforms, evaluating fiscal performance, and agreeing on budgetary targets for the next fiscal year.
For the current fiscal year, the FBR is expected to collect approximately Rs11,800 billion in taxes. This figure falls short of the revised target of Rs12,970 billion, indicating a possible revenue shortfall of Rs1,170 billion.
This gap raises concerns about Pakistan’s fiscal discipline and the need for effective policy adjustments to meet future financial obligations and development goals.
As the government and the IMF prepare to finalize the terms of fiscal policies for 2025–26, stakeholders within Pakistan are closely watching the process.
The decisions made in the coming weeks will likely shape the country’s economic trajectory and its ability to manage debt, sustain public services, and stimulate growth.
