IMF demands Pakistan tackle revenue shortfall within next quarter

The International Monetary Fund (IMF) has urged Pakistan to address its revenue shortfall within the next quarter, sources familiar with the matter revealed.

The IMF has requested a comprehensive plan to cover the shortfall, which has become a significant concern.

The Federal Board of Revenue (FBR) has been instructed to implement measures under the compliance risk management and risk improvement plan to address the issue effectively.

The tax shortfall has widened to PKR 606 billion in just eight months of this fiscal year. The FBR provisionally pooled PKR 7.342 trillion during the July-February period, showing an impressive growth of around 28%. However, it was not enough to meet the IMF-dictated target of PKR 7.95 trillion.

An IMF mission arrived in Islamabad on Monday, for the first review of the $7 billion bailout program.

Negotiations between Pakistan and the IMF included long sessions with the Ministry of Finance and State Bank officials. Sources indicated discussions covered Islamic banking initiatives, refinance scheme transition, and development finance.

The IMF delegation reviewed the external sector and the current forex market and discussed the operationalization of the bank resolution framework to reduce banking sector risk.

Briefings were also given on measures related to monetary policy and the need for timely actions on right-sizing measures to reduce expenses. Sources noted negotiations with the Cabinet Division, Ministry of Finance, and Secretary Cabinet on right-sizing measures.

The IMF delegation was briefed on large retailers outside the tax net in major cities and directed recovery efforts on high-risk cases in Islamabad, Karachi, and Lahore. The Ministry of Energy and Petroleum also reviewed the performance in the power and petroleum sectors during the negotiations.