Islamabad, Mar 6, 2025: The International Monetary Fund (IMF) is expected to lower Pakistan’s revenue collection target for the current fiscal year to Rs. 12,480 billion, marking a reduction of Rs. 490 billion from the initial goal of Rs. 12,970 billion.
The global lender is anticipated to advise the Revenue Division to revise the target downward, keeping it below Rs. 12.5 billion.
Additionally, the IMF is likely to recommend that the finance ministry curtail government spending by Rs. 500 billion or introduce new tax measures, such as a mini budget, to boost revenue.
However, the government will finalize its strategy during high-level policy discussions scheduled for next week.
Meanwhile, representatives from the tobacco sector have urged the IMF review delegation to reduce the Federal Excise Duty (FED) on cigarettes by 25 percent and establish a third-tier tax structure.
They argue that steep FED hikes have led to a decline in tax-paid cigarette sales while simultaneously fueling the illicit tobacco trade.
Industry data indicates that revenue from the tobacco sector surged from Rs. 148 billion in 2021-22 to Rs. 277 billion in 2023-24.
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However, projections suggest a decline to Rs. 243 billion by June 2025, with further reductions to Rs. 223 billion by 2026-27.
Officials from the Federal Board of Revenue (FBR) have cautioned that implementing the industry’s demands could lead to a revenue shortfall of Rs. 50 billion.
They attribute the drop in tax-paid cigarette volumes to increased smuggling and tax evasion, which collectively cause an estimated annual loss of Rs. 300 billion ($1.1 billion) to the national treasury.
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Despite the FBR’s confidence in achieving its initial target by resolving outstanding tax cases in higher courts,
The IMF remains unconvinced and foresees difficulties in meeting the revenue goals during the final quarter (April to June 2025).
