ISLAMABAD: The International Monetary Fund and Pakistan have concluded negotiations on the upcoming federal budget, with both sides reaching consensus on key fiscal targets and policy measures, according to sources.
The discussions, held in Islamabad, focused on aligning Pakistan’s economic framework with IMF requirements. Officials confirmed that all major budgetary matters and performance targets have been agreed upon, paving the way for the announcement of the 2026–27 federal budget.
However, talks are still ongoing between the Federal Board of Revenue (FBR) and IMF officials regarding possible relief measures for salaried individuals. These virtual discussions are aimed at adjusting tax slabs to provide some relief to the middle-income segment.
Sources revealed that the IMF has agreed— for the second time in the current fiscal year— to revise downward the FBR’s tax collection target. The revised target has been reduced from Rs13,979 billion to approximately Rs13,005 billion.
For the upcoming fiscal year, the total budget size is expected to be around Rs18 trillion. The tax collection target is projected at Rs15,264 billion, with direct taxes contributing approximately Rs7,413 billion.
In addition, the government is expected to set a target of Rs1,043 billion under Federal Excise Duty, while sales tax collections may reach Rs4,727 billion. Customs duties are projected to generate around Rs1,651 billion.
Revenue from the Petroleum Development Levy is expected to increase significantly to Rs1,727 billion, compared to Rs1,468 billion in the previous year. Non-tax revenue is estimated at Rs2,768 billion, while gas surcharge collections may reach Rs151 billion.
On the expenditure side, debt servicing is expected to remain a major burden. The government is likely to allocate around Rs7,824 billion for interest payments and loan repayments, including Rs6,652 billion for domestic debt and Rs1,107 billion for foreign obligations.
Furthermore, the government is considering introducing new taxes worth Rs220 billion in the upcoming budget, alongside proposed adjustments in income tax slabs for salaried individuals.
