Pakistan Rejects IMF Mini-Budget Proposal

Pakistan has refused the International Monetary Fund's proposal to introduce a mini-budget to address the revenue shortfall of Rs386 billion recorded during the first half of the fiscal year 2024-25. Prime Minister Shehbaz Sharif instructed the Federal Board of Revenue to address this deficit through alternative measures without burdening the public with new taxes.

Last week, the Federal Board of Revenue devised a plan to tackle the shortfall ahead of an IMF review scheduled for February. The strategy involves clearing shipments and containers stuck at ports to boost tax and duty revenues and auctioning seized smuggled goods to generate additional income.

The Federal Board of Revenue plans to enhance enforcement measures, target tax evaders, and improve tax collection from under-taxed sectors. Expediting the resolution of tax disputes in courts has also been prioritized to ensure timely revenue inflows.

These measures are part of the government's efforts to secure a one-billion-dollar loan tranche under the IMF's seven-billion-dollar Extended Fund Facility program. An IMF mission will visit Islamabad in February to conduct the first review of the program.

The Federal Board of Revenue reported a tax collection of Rs5.623 trillion from July to December 2024-25, which fell short of the target of Rs6.009 trillion. In July 2024, Rs996 billion was collected against a target of Rs985 billion. August collections totaled Rs782 billion compared to the target of Rs898 billion. September saw Rs1.106 trillion against a target of Rs1.098 trillion. October collections were Rs878 billion against Rs980 billion. November recorded Rs855 billion compared to the target of Rs1.003 trillion, and December’s collection reached Rs1.326 trillion against the target of Rs1.373 trillion.

The Federal Board of Revenue has set a target of Rs960 billion for January and aims to fully implement its alternative strategy by March.