ISLAMABAD: Pakistan is preparing to roll out a mini budget to bridge a major financing gap, signalling new taxes and spending cuts as the government works to meet IMF targets, according to ARY News.
Officials are expected to introduce fresh taxation measures before the next federal budget. These proposals include a 5% hike in excise duty on fertilizers and pesticides, along with new taxes on premium sugar products. Pakistan has also assured the IMF that an 18% sales tax will be applied to several specific items to boost revenue.
The IMF report warns that the FBR is likely to miss its collection target, pushing the government to reduce expenditures and tighten fiscal controls. Pakistan aims to raise its tax-to-GDP ratio to 15% and must fill a USD 4 billion financing gap this fiscal year. The country expects USD 2 billion in IMF instalments and nearly USD 1 billion through the Saudi oil facility.
Additional inflows may include USD 504 million from the Asian Development Bank, USD 500 million from the World Bank Group, and USD 250 million through an international bond.
To boost revenue, Pakistan has agreed to tax fertilizers, pesticides, and surgical items, with these commitments added to the MEFP (Memorandum of Economic and Financial Policies) for the upcoming IMF tranche. The IMF has also set August 2026 as the deadline for amendments to the State Owned Enterprises (SOE) law.
The government has pledged to fully deregulate the sugar sector, while the IMF continues to push reforms in energy tariffs, cost reductions, and economic stability.
Over the next two years, Pakistan will install POS systems in 40,000 major retail outlets, aiming to strengthen documentation. Tax returns rose from 5.2 million in FY2024 to 7 million in FY2025, and the MEFP includes plans to harmonise sales tax across all provinces.
In development spending, only 10% of the PSDP will be dedicated to new projects, while nearly Rs2.5 trillion worth of ongoing projects will be prioritised. The next fiscal year will also place stronger focus on climate-related initiatives and upgrade public procurement transparency through the e-PADS system, with a report due to the President by March 2026.
Under the Kafalat Programme, quarterly payments will rise to Rs14,500 from January 2026, and the beneficiary base will grow to 10.2 million people. By June, biometric verification and e-wallet payments will be introduced for BISP beneficiaries.
