Govt agrees to new IMF targets after missing about a dozen |
• Additional taxes, spending cuts planned to offset revenue shortfalls
• Govt commits to raising federal excise duty on fertilisers, pesticides
• FED to be introduced on sugary items; goods to be shifted to 18pc GST
• Expenditure cuts pledged if National Tariff Policy leads to revenue losses
ISLAMABAD: Having missed a total of 11 performance indicators under its IMF programme, the government has agreed to 11 new targets, including additional tax measures and expenditure cuts from early next month, to make up for rising revenue shortfalls and keep the $7 billion Extended Fund Facility (EFF) on track.
Commitment to the new or revised structural benchmarks, together with completion of two “prior actions”, enabled the conclusion of a staff-level agreement on the second review of the EFF and its approval by the IMF Executive Board for the disbursement of about $1.2bn, reveal fresh documents released by the Fund on Thursday.
The government confirmed at the outset that it estimated a shortfall from the underperformance of the captive power levy of Rs104bn, which it said would be covered by a reduction in power subsidies made possible through lower circular debt accumulation relative to budget estimates.
The Federal Board of Revenue (FBR) has already missed its collection target by about Rs430bn in the first five months of FY26.
“Should FBR’s revenues continue to fall short of expectations in the second quarter of FY26 (end of current month), and if other tax revenues are insufficient to bridge the gap, we will — in consultation with IMF staff — increase federal excise duty (FED)........