Pakistan has submitted a contingency fiscal plan to the IMF to avoid a mid-year mini budget, as fresh documents reviewed by the Fund indicate emerging revenue shortfalls. The government has assured the IMF that it is prepared to take early corrective steps if collections fall below targets.
The IMF report highlights concerns that the Federal Board of Revenue may miss its annual target ahead of the December 2025 review. To safeguard fiscal stability, the government has pre committed to new taxation measures and tighter spending controls, ensuring compliance with IMF performance criteria.
According to the plan shared with the IMF, Pakistan is considering a 5% increase in excise duty on fertilizers and pesticides, along with new taxes on high value sugar products to expand the revenue base. An 18% sales tax may also apply to selected items currently zero rated or taxed at reduced rates, aimed at boosting second-half revenue.
Alongside additional taxes, the government has outlined expenditure cuts targeting non-essential spending to prevent widening fiscal gaps.
“Early corrective action will be essential for maintaining fiscal discipline under the program,” the IMF noted, emphasizing the need for timely revenue and expenditure adjustments.
The government reaffirmed its long-term goal of raising Pakistan’s tax-to-GDP ratio to 15%, a core requirement under IMF-supported structural reforms designed to ensure lasting economic stability.