The International Monetary Fund (IMF) has proposed a tax target of over Rs 15 trillion for Pakistan in the upcoming FY 2025 -26 budget as part of ongoing virtual talks between the two parties.
Sources indicate that 85% of the discussions between IMF and Pakistan are complete, with a focus on finalizing the budget details prior to its presentation in the National Assembly.
The new budget aims to raise Pakistan’s tax-to-GDP ratio to 13% and generate Rs 2,745 billion in non-tax revenue. The government also expects economic growth of over 4% in the next fiscal year, fueled by increased investment and consumption.
IMF’s Stance on Pakistan’s Tax Exemptions
The IMF has urged Pakistan’s Special Investment Facilitation Council (SIFC) to avoid granting tax exemptions to international investment projects, including the $2 billion Chaghi-Gwadar railway track project. The IMF delegation emphasized that exemptions could hinder the country’s revenue generation efforts.
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The SIFC, established to attract foreign investment, has facilitated projects like the Reko Diq-Gwadar railway line for mineral transportation. However, the IMF’s refusal to allow tax exemptions for international investments has created challenges. Officials briefed the IMF delegation, highlighting the SIFC’s role in providing a platform for investment and infrastructure development.
Despite these challenges, the government remains optimistic about achieving its economic targets. The IMF’s proposed tax measures are expected to strengthen Pakistan’s fiscal position and support long-term growth.
