‘Mini-budget’ likely as FBI misses tax collection target

ISLAMABAD: The International Monetary Fund (IMF) has asked for a mini-budget from the federal government after the Federal Bureau of Revenue (FBR) failed to meet its tax collection target, sources said Geo News on Saturday.

The global lender rejected Islamabad’s request to revise FBR’s tax targets in a virtual meeting, according to sources in the tax authority.

Insiders said the tax shortfall could hamper the release of the second tranche of the $7 billion Extended Fund Facility (EFF) secured by the current government in July this year.

Against this backdrop, insiders said that a mini-budget of Rs 500 billion is planned to meet the revenue shortfall.

This comes as the tax collection body is reported by The News to be facing a deficit of about Rs 190 billion in the first four months (July-October) after it managed to collect only Rs 3.440 billion against the set target at 3 rupees. 636 billion.

In October 2024, the FBR collected Rs 877 billion against the set target of Rs 980 billion, recording a deficit of Rs 103 billion. The FBR faced a deficit of Rs 91 billion in the first quarter (July-September) of the current fiscal year.

The government has set a target of Rs 12,913 billion for the current fiscal year as per the IMF agreement. Parliament has approved the FBR target of Rs 12,970 billion for the current financial year.

The failure to achieve its goal led Prime Minister Shehbaz Sharif’s administration to reshuffle the leadership of both the Internal Revenue Service (IRS) and the Customs Group, including a member of the IR operation and three key department heads of large taxpayers.

The forward-looking mini-budget comes after the FBI explicitly ruled out any such possibility back in September. However, during a meeting of the Senate Standing Committee on Finance and Revenue chaired by Senator Salim Mandviwalla, FBR Policy Member Hamid Atiq Sarwar acknowledged the difficulty of achieving the tax target for the current financial year.

In June, the current government passed a tax-heavy budget in hopes of securing a new bailout package from the IMF. The move sealed the deal between Islamabad and the lender for a 37-month loan facility.

Since then, the country has already received the first tranche of $1.03 billion (SDR 760 million) under the EFF amid the government’s ongoing strenuous efforts to address the various economic challenges facing the cash-strapped country.

With positive indicators on the economic front such as a 31.1% reduction in trade deficit, 7.2% annual inflation rate, etc., Islamabad has sought around $1 billion in a formal funding request from the IMF fund, which helps countries with low and middle income. manage external shocks, Finance Minister Muhammad Aurangzeb confirmed last month.

According to the IMF forecast, Pakistan’s economy is expected to get a boost from GDP growth of 3.2% in FY2025 amid easing inflationary pressures.