IMF raises concerns over Pakistan’s revenue targets amid plan to abolish super tax

2026-03-10 - 09:04

ISLAMABAD – The International Monetary Fund (IMF) expressed doubts about Pakistan’s ability to achieve its revenue targets for the upcoming fiscal year following the government’s plan to abolish the super tax and lower tax rates for the salaried class, the official sources said on Tuesday. During virtual discussions with Pakistani authorities, the IMF noted that one-time measures—such as recovering pending instalments of the super tax, enforcing compliance, and settling ongoing litigation—could help the Federal Board of Revenue (FBR) collect around Rs13,400 to Rs13,500 billion by June 2026. However, the fund questioned how these steps would support the revenue goals for fiscal year 2026-27. The sources argued that the measures are not strictly temporary, as the resolution of pending court cases is expected to generate significant revenue in the next budget cycle. The IMF also recommended adjusting the rupee against the US dollar based on the Real Effective Exchange Rate (REER), which could lead to a depreciation to Rs290-300 per dollar from the current rate of approximately Rs280. In a recent meeting at the Prime Minister’s Office, the government decided to seek IMF approval for abolishing the super tax and reducing the salaried class tax rate by 5% in the 2026-27 budget. During subsequent virtual talks, IMF officials questioned how overall revenue targets would be met if these concessions were allowed, urging the government to identify alternative revenue sources. The Tax Policy Office (TPO), established under the Ministry of Finance, has begun preparing proposals for the next fiscal year. Following the IMF and World Bank Spring Meetings from April 13 to 18 in Washington, DC, further virtual discussions are expected to finalise the budget. The sources added that while the proposed reduction in tax rates for higher salaried brackets may cost Rs15-20 billion, the FBR must present compensatory measures to ensure IMF approval.