Save Our Pak
Islamabad (December 12, 2025): There is a strong possibility that the government may introduce a mini-budget before the next federal budget. This move could lead to new taxes on several essential items.
According to reports, the government has informed the International Monetary Fund (IMF) that it is ready to impose new taxes to cover the revenue shortfall. These taxes may be applied to fertilizers, agricultural medicines, and surgical items. The aim is to meet tax targets before the upcoming budget.
The report states that Pakistan is prepared to take additional tax measures and reduce government spending if tax collection remains low. By the end of December 2025, if revenue targets are not met, further tax steps will be taken.
To address the tax gap, the government plans to increase the federal excise duty on fertilizers and pesticides by 5 percent. New taxes may also be introduced on high-value sugar products.
Pakistan has assured the IMF that an 18 percent sales tax may be imposed on several specific items. The IMF report also mentions that if revenue continues to fall, the government will reduce expenses. There is a risk that tax collection by the Federal Board of Revenue (FBR) may remain lower than expected.
According to the IMF, Pakistan aims to increase its tax-to-GDP ratio to 15 percent. During the current fiscal year, the country must close a financing gap of 4 billion dollars. Pakistan is expected to receive around 2 billion dollars in loan installments from the IMF program this year. Additionally, Saudi Arabia may provide 1 billion dollars’ worth of oil on deferred payment.
The report estimates that Pakistan could receive budget support of 504 million dollars from the Asian Development Bank and 500 million dollars from the World Bank Group this fiscal year. Another 250 million dollars may be raised through international bond issuance.
Pakistan has also agreed to include new tax measures and multiple conditions in the Memorandum of Economic and Financial Policies for the next IMF installment. If the revenue shortfall continues, a federal excise duty will be imposed on fertilizers and agricultural medicines.
The IMF has set August 2026 as the deadline for changes in laws related to state-owned enterprises. The FBR has also assured the IMF that more taxes will be introduced if revenue targets are missed.
The IMF report says the government has agreed to fully deregulate the sugar sector. The IMF will continue working with Pakistan to achieve stable economic growth. Reforms in the energy sector, tariff adjustments, and cost-reduction measures will remain ongoing.
The IMF noted that recent floods affected nearly 7 million people and caused around 1,000 deaths. The floods also caused major damage to infrastructure, homes, and livestock. Inflation is expected to remain around 7 percent during the current fiscal year.
According to the report, point-of-sale systems will be installed at 40,000 large retailers across the country over the next two years. In fiscal year 2024, 5.2 million income tax returns were filed, while 7 million returns are expected in 2025.
The IMF stated that sales tax coordination among all four provinces will be ensured. In fiscal year 2027, only 10 percent of the Public Sector Development Program (PSDP) will be spent on new projects, while priority will be given to completing existing projects worth nearly 2,500 billion rupees.
The country report also mentions that climate change projects will receive more attention in the coming fiscal year. To improve transparency in public procurement, e-procurement systems will be introduced. The Auditor General of Pakistan will submit a report on this system to the President by March 2026.
From January 2026, payments under the Kafalat Program will be increased to 14,500 rupees on a quarterly basis. The number of beneficiaries will be expanded to 10.2 million people. Biometric verification and e-wallet systems will be introduced for payments under the BISP program by June.
The IMF report confirms that tariff rebasing has been shifted from July to January 2026. During the last fiscal year, circular debt in the power sector was reduced to 1,614 billion rupees.
The report adds that by January 2026, agreements worth 1.2 trillion rupees with commercial banks will be settled. Of this amount, 660 billion rupees will be paid to Private Holding Limited, while the remaining amount will go to CPPA. To further reduce circular debt, interest payments worth 128 billion rupees from IPPs will be eliminated.
Reported by Save Our Pak
