Pakistan, IMF hold virtual talks on financing gaps, FBR credibility

IMF – (Web Desk) – Pakistan and the International Monetary Fund (IMF) on Tuesday began virtual technical discussions focusing on the country’s external financing needs and the Federal Board of Revenue’s (FBR) ability to achieve its revised tax collection targets for the remainder of the fiscal year, The News reported.

During the briefing, the FBR team informed the IMF that it expects to collect around Rs13,500 billion in taxes by June 2026, slightly below the revised target of Rs13,979 billion. The IMF raised concerns about how the FBR would surpass Rs13,000 billion in collections, seeking clarification on how the remaining gap could be bridged. The FBR assured the IMF that it is making every effort to reach Rs13,500 billion by the end of the fiscal year.

Earlier, the IMF had already reduced the FBR’s original target of Rs14,130 billion, approved by parliament, to Rs13,979 billion. Convincing the IMF for any further revision appears challenging, as its own estimates suggest revenue may reach only Rs13,000–13,200 billion.

In this scenario, the Ministry of Finance may have to cut spending to stay within the fiscal deficit limits, particularly the projected primary balance of 2.4% of GDP by June 2026. The FBR aims to collect Rs1,366 billion in March, which will require a strong push from tax authorities, especially as sluggish economic activity makes achieving targets harder in the final quarter.

The FBR noted that it faced a shortfall of Rs428 billion in the first eight months of the fiscal year. Still, it hopes to meet Rs13,500 billion in collections over the remaining four months.

On external financing, finance ministry officials updated the IMF about rollover arrangements with friendly countries and disbursements from multilateral and bilateral creditors. The IMF also inquired about a $2 billion rollover from the UAE. While no latest confirmation was available, officials said negotiations were ongoing to secure at least a one-year extension.

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The disbursements of multilateral and bilateral loans are on track. On refinancing from China, the IMF was briefed that Pakistan repaid a commercial loan to China with the hope that it would be refinanced within the ongoing fiscal year.

There is no possibility of launching a Eurobond/Sukuk bond in the current fiscal year. The IMF also sought clarity on the Panda bond, which was delayed for at least a few months.