Pakistan met 3 out of 5 major IMF conditions, including primary budget surplus and provincial...
Pakistan Meets Key IMF Targets—But Tax Collection Falls Short
- By Zain Ul Abideen
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Pakistan met 3 out of 5 major IMF conditions, including primary budget surplus and provincial revenue targets. However, FBR’s tax shortfall remains a concern.
Pakistan’s $7 billion IMF bailout program remains on track, with the country meeting three out of five key fiscal conditions in the first nine months of the fiscal year. While the federal and provincial governments exceeded some targets, the Federal Board of Revenue (FBR) struggled with tax collection—raising concerns about long-term financial stability.
Key IMF Conditions: Hits and Misses
1. Primary Budget Surplus Exceeded (Met)
The IMF required Pakistan to maintain a primary budget surplus (revenue minus expenses, excluding interest payments) of Rs 2.7 trillion. Instead, the federal government reported a Rs 3.5 trillion surplus—2.8% of GDP.
Why? The surplus was boosted by early booking of the State Bank of Pakistan’s (SBP) Rs 2.5 trillion profit.
2. Provincial Cash Surplus (Met)
All four provinces collectively generated a Rs 1.028 trillion surplus, surpassing the IMF target by Rs 25 billion.
- Sindh, KP, and Balochistan led in tax collection.
- Punjab was not mentioned in the Finance Ministry’s report.
3. Non-Tax Revenue Growth (Met)
Non-tax revenues (like petroleum levies) reached Rs 4 trillion, exceeding expectations by Rs 71 billion.
Petroleum Levy Collection:
- Rs 834 billion (9 months) vs. Rs 720 billion (last full year).
4. FBR’s Tax Collection Shortfall (Missed)
Target: Rs 9.17 trillion
Actual: Rs 8.5 trillion (Rs 715 billion short)
- Retailer Tax (Tajir Dost Scheme):
- Target: Rs 36.7 billion
- Actual: Almost zero collection.
Why Is FBR Falling Behind?
- Weak Trader Tax Compliance: Most retailers avoided the Tajir Dost scheme.
- Salaried Class Bears Burden: Salaried individuals paid Rs 391 billion in taxes, while traders contributed little.
Provincial Performance Breakdown
Province | Revenue | Spending | Surplus | Issue |
Punjab | Rs 2.9T | Rs 2.4T | Rs 441B | Rs 117B discrepancy (wheat debt) |
Sindh | Rs 1.5T+ | Rs 1.5T | Rs 395B | Rs 10B discrepancy |
KP | Rs 1.03T | Rs 920B | Rs 111B | Rs 13B discrepancy |
Balochistan | – | – | Rs 105B | Overspending on development |
Key Insight: Punjab and Balochistan overspent on development, while Sindh and KP stayed within limits.
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Federal Spending: Interest & Defense Dominate
The federal government spent Rs 11.5 trillion in nine months:
- Interest Payments: Rs 6.4 trillion (up Rs 921 billion from last year).
- Defense: Rs 1.42 trillion (16.5% increase).
Problem: After paying provinces, the federal net income (Rs 7.5 trillion) was Rs 394 billion short of covering just interest + defense costs.
What’s Next for Pakistan’s IMF Program?
- The IMF expects Rs 1.217 trillion total surplus from provinces this year.
- If FBR improves tax collection, Pakistan may secure further IMF support.
- Rising petroleum levies and central bank profits are helping—but long-term reforms are needed.
FAQs
A: Pakistan met 3 out of 5 key conditions, including primary surplus and provincial revenue targets, but FBR missed tax goals.
A: Low compliance under the Tajir Dost scheme and weak trader tax payments caused a Rs 715 billion shortfall.
A: Sindh, KP, and Balochistan exceeded tax targets, while Punjab had a Rs 117 billion spending discrepancy.
A: Rs 834 billion in nine months—already higher than last year’s Rs 720 billion.
A: Yes, if tax reforms improve and provinces maintain surpluses, but rising debt costs remain a risk.
Pakistan’s IMF program is partially on track, with strong provincial performance but weak federal tax collection. Without fixing FBR’s gaps, the country may face tougher IMF terms in the future.
For more updates on Pakistan’s economy, follow credible financial news sources.
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Zain Ul Abideen
Hi, I’m Zain Ul Abideen , a passionate writer who loves sharing the latest trending stories. I specialize in creating simple, engaging, and easy-to-understand articles for readers worldwide, especially those in Pakistan. My goal is to keep you informed and inspired with accurate, relatable, and enjoyable content.
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