Tax-to-GDP ratio to stall over five years, IMF expects |
ISLAMABAD: With a 1.4 percentage-point increase in the tax-to-GDP ratio last year, mostly through additional revenue measures worth Rs2.5 trillion, the International Monetary Fund (IMF) now expects the federal tax contribution to remain stagnant over the next five years and a slight improvement coming from provinces.
The latest IMF estimates suggest Federal Board of Revenue (FBR) receipts rose from 8.9 per cent of GDP in the fiscal year 2023-24 to 10.3pc in 2024-25, but still missed the Fund’s programme target of 10.7pc.
For the current fiscal year, the IMF projects FBR revenue at 11.1pc of GDP, which would then remain flat at that level until FY30.
In absolute terms, FBR revenue increased from Rs9.3tr in FY24 to Rs11.74tr in FY25, with a massive shortfall. For the current year, collections are projected at Rs13.98tr, implying a shortfall of Rs328 billion under existing assumptions.
The IMF noted that tax revenue collection in FY25 fell short by Rs1.224tr relative to budget projections and by Rs524bn relative to the lender’s first review target. About Rs850bn of the shortfall relative to the budget reflected faster-than-expected inflation deceleration and........