Islamabad, September 27, 2025: Pakistan has informed the International Monetary Fund (IMF) that it will miss its July–September tax collection target of Rs3.1 trillion, but hopes to bridge the shortfall later in the year through higher growth, inflation, and increased solar panel imports.
During Friday’s briefing with the visiting IMF mission, the Federal Board of Revenue (FBR) conceded that tax collection in the first quarter may fall short of Rs2.95 trillion against the Rs3.08 trillion target. Officials expressed optimism that revenues would recover from November once economic activity picks up.
The discussions are part of ongoing negotiations for the release of a $1 billion tranche under the Extended Fund Facility (EFF) and $220 million under the Resilience and Sustainability Facility (RSF).
The government has set an ambitious annual revenue goal of Rs14.13 trillion, but doubts remain after last year’s shortfall of more than Rs1.2 trillion. The IMF pressed Pakistani authorities for updated revenue projections and asked about the impact of floods on collections this fiscal year.
FBR officials argued that inflationary pressures and a projected GDP growth rate above 3% could help offset some of the shortfall. They also pointed to a 16% rise in import tax collection during July–August, driven largely by a 9% increase in dollar-value imports and double-digit growth in rupee terms.
Authorities highlighted Rs190 billion expected from enforcement measures and a new 10% sales tax in erstwhile FATA, alongside Rs18 billion in projected revenue from solar panel imports. Nearly Rs6 billion has already been collected in the first two months, they said.
The FBR also addressed the controversy over a newly introduced column in income tax returns requiring filers to declare the “estimated fair market value” of assets. Following criticism, Prime Minister Shehbaz Sharif formed a committee led by Law Minister Azam Nazeer Tarar, which recommended scrapping the requirement. The proposal was formally withdrawn this week.
The FBR had initially argued that the column was for statistical purposes to support the Economic Survey and not for calculating liabilities, but the claim failed to satisfy critics or the IMF.
In parallel meetings, the Power Division briefed the IMF on its plan to tackle the Rs1.25 trillion circular debt through syndicated bank financing. Adviser to the PM on Privatisation, Muhammad Ali, said HBL Chairman Sultan Allana had led negotiations on behalf of banks, securing full participation from 18 lenders.
The Rs1.225 trillion facility—structured through Islamic financing instruments such as Bai Muajjal, Ijara, and floating Sukuk bonds—was secured at 0.9% below the prevailing Karachi Interbank Offered Rate (KIBOR) for a maximum of six years. Repayments will be made through a Rs3.23 per unit surcharge on electricity bills.
Officials said the deal will allow the debt to be cleared in under six years while generating Rs350 billion in consumer savings and avoiding Rs377 billion in late payment surcharges. They also claimed Rs175 billion in savings from lower interest rates and Rs242 billion from reduced theft and technical losses.
Energy Minister Sardar Awais Leghari warned that the existing net-metering regime was creating financial imbalances, with 350,000 solar consumers benefiting from subsidised buy-back rates indirectly borne by 35 million others. He said falling grid demand, driven by high tariffs and consumer migration to solar, was undermining revenue flows.
Despite these challenges, the Power Division told the IMF it remains committed to reforms aimed at reducing line losses, improving recoveries, and restoring sustainability to the energy sector.
