Pakistan's Tax Shortfall Widens to Rs 610bn, IMF Goals at Risk

The shortfall reflects the broader economic slowdown in Pakistan, worsened by trade disruptions linked to ongoing conflict in the Middle East, according to Business Recorder report.

Pakistan's tax collection gap has widened sharply, with the Federal Board of Revenue missing its target for the first nine months of FY2026 by Rs 610 billion, the report said.

The situation deteriorated further in March, as global trade disruptions and slowing economic activity reduced revenue inflows.

Officials fear that the gap will continue to grow, making it increasingly unlikely that the government will meet its full-year tax target.

However, a recent policy decision to pass on higher international oil prices to consumers has helped prevent further fiscal strain.

By avoiding an increase in fuel subsidies, the government has limited the rise in petroleum differential claims, which could otherwise have made it harder to achieve its primary fiscal balance target.

Despite this, revenue collection remains under pressure. Lower imports, particularly in the energy and gas sectors, have reduced sales tax collection at the import stage, weakening a key source of government income.

At the same time, Pakistan faces mounting pressure from the International Monetary Fund, which has set an ambitious tax target of Rs 15.6 trillion for the next fiscal year.

This comes alongside expectations of additional revenue measures worth Rs 400 billion, the report stated.

Given that the current year's revised target of Rs 13.98 trillion is already likely to be missed by a wide margin, analysts believe next year's goal may be unrealistic.

Further complicating matters, the IMF has linked the approval of its ongoing programme review and the release of a $1.2 billion tranche to the recovery of Rs 322 billion from tax cases already decided in favour of the FBR.

- IANS