IMF deal: ‘Mini-budget’ likely as FBR misses tax collection target
ISLAMABAD: The International Monetary Fund (IMF) has sought a mini-budget from the federal government after the Federal Bureau of Revenue’s (FBR) failed to achieve its tax collection target, sources told Geo News on Saturday.
According to the sources within the tax collecting body, the global lender turned down Islamabad’s request to reconsider FBR’s tax targets in a virtual meeting.
The insiders said the tax shortfall could create hurdles in the release of the second tranche of the $7 billion loan Extended Fund Facility (EFF) programme secured by the incumbent government in July this year.
In the backdrop of this, the insiders said Rs500 billion mini-budget was on the cards to bridge the revenue shortfall.
The development came as the tax collection authority, as reported by The News, is facing a shortfall of around Rs190 billion during the first four months (July-October) after it only managed to collect Rs3,440 billion against the assigned target of Rs3,636 billion.
In October 2024, the FBR collected Rs877 billion against the assigned target of Rs980 billion, registering a shortfall of Rs103 billion. The FBR had faced a shortfall of Rs91 billion during the first quarter (July-September) of the current fiscal year.
The government assigned the target of Rs12,913 billion for the current fiscal year under the IMF agreement. The parliament approved FBR’s target of Rs12,970 billion for the ongoing fiscal year.
Failure to achieve its target has led to Prime Minister Shehbaz Sharif’s administration reshuffling the top guns in both the Inland Revenue Service (IRS) and Customs Group, including Member IR Operation and three key Chief Commissioners of Large Taxpayer Offices.
The prospective mini-budget came after the FBR, back in September, had explicitly ruled out any such possibility. However, during a meeting of Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, FBR Member Policy Hamid Ateeq Sarwar acknowledged the difficulty of reaching the tax target for the current fiscal year.
In June, the incumbent government had passed a tax-heavy budget in its hopes of securing a fresh bailout package from the IMF. The move succeeded in securing a deal between Islamabad and the lender for a 37-month loan programme.
Since then, the country has already received the first tranche of $1.03 billion (SDR 760 million) under the EFF amid ongoing strenuous efforts by the government to address various economic challenges faced by the cash-strapped country.
With positive indications on the economic front such as a 31.1% reduction in the trade deficit, annual inflation rate of 7.2% etc, Islamabad has requested around $1 billion in a formal request for funding from the IMF facility that helps lows and middle-income countries manage external shocks, Finance Minister Muhammad Aurangzeb confirmed last month.
Pakistan’s economy, as per the IMF’s projection, is expected to experience a boost with a 3.2% GDP growth rate for the fiscal year 2025, amidst declining inflationary pressures.
