- Govt decides to request IMF for abolishing Super Tax.
- Lender questions how next fiscal year target will be materialised.
- IMF to hold talks with govt to finalise the budget 2026-27.
ISLAMABAD: The International Monetary Fund (IMF) has questioned the government’s ability to boost revenue in the upcoming budget after the abolition of the super tax and a reduction in tax rates for the salaried class, The News reported on Tuesday.
The IMF mission, holding parleys virtually with Pakistani authorities, argues that one-time measures such as litigation, enforcement and outstanding instalment of super tax might enable the FBR to collect Rs13,400 to Rs13,500 billion by the end of June 2026, but how it will help achieve the tax collection target of the fiscal year 2026-27.
The Pakistani authorities’ response is that these would not be one-time measures, as the resolution of cases pending with the courts would also yield billions of rupees in the coming budget.
“The IMF mission will hold parleys in May 2026 to finalise the upcoming budget where all relevant details will be firmed up,” said official sources. The IMF has also asked for adjusting the rupee against the US dollar in accordance with the Real Effective Exchange Rate (REER).
Such a decision may see the rupee depreciating in the range of Rs290 to 300 against US dollar from the existing rate of around Rs280.
In a meeting held at the Prime Minister’s Office, the government decided to request the IMF to abolish super tax and reduce the salaried class rate by 5% for the next budget.
However, in a virtual meeting held on Friday, a heated debate occurred when the IMF mission raised objections that if they agreed to a reduction in the overall tax collection after accepting one-time measures, then how the next fiscal year target would be materialised.
In reality, it is premature to assume that the IMF may agree to the abolition of super tax. Sources said the IMF questioned where the government will fetch Rs150 billion as an alternative if it wanted the abolition of super tax in one go.
The Tax Policy Office (TPO) has been established in the Ministry of Finance. The IMF mission is expected to hold parleys virtually after the conclusion of the IMF/WB meeting. The 2026 Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) will take place from April 13 to 18, in Washington, DC.
After this spring meeting, the IMF mission will hold talks with the government to finalise the budget 2026-27. The TPO has kick-started preparations for the budgetary proposals for the next fiscal year.
If the government wants to rationalise the tax rates, it will have to come up with alternative avenues to impose taxes and generate revenues to bridge the gap.
Sources said the tax rates for higher income slabs in the salaried class might be reduced, as it requires a cost of Rs15 to 20 billion, but the FBR will have to present alternative revenue measures to bridge the gap after which the IMF will grant its assent.
