IMF wants provinces to collect 64% more taxes next year

The International Monetary Fund (IMF) has set an ambitious target for Pakistan’s provincial governments to increase tax collection by nearly 64% in fiscal year 2026-27, underscoring growing pressure on provinces to contribute more aggressively to the country’s revenue mobilization efforts.

According to IMF programme documents, consolidated net tax revenue collected by provincial revenue authorities is projected to reach PKR 1.947 trillion by the end of June 2027, compared with an estimated PKR 1.190 trillion in the current fiscal year. The increase of about PKR 757 billion represents growth of 63.6%.

The target has been included as an indicative benchmark under Pakistan’s ongoing IMF-supported reform programme and reflects the lender’s emphasis on strengthening provincial tax administration and expanding revenue streams beyond the federal level.

Under the quarterly roadmap, provincial tax authorities are expected to collect PKR 389 billion by September 2026, PKR 798 billion by December 2026 and PKR 1.285 trillion by March 2027 before reaching the annual target of PKR 1.947 trillion.

The higher collection goal comes as Pakistan seeks to improve fiscal sustainability, reduce its dependence on borrowing and meet IMF conditions tied to continued financial support.

The IMF programme also envisages a significant increase in overall tax revenue, with the Federal Board of Revenue (FBR) targeted to collect PKR 15.264 trillion in net taxes by June 2027.

Economists say meeting the provincial revenue target will require stronger enforcement of sales tax on services, improved business documentation and wider adoption of digital tax administration systems, particularly in the country’s major urban centers.

The provinces have increasingly come under IMF scrutiny for their relatively low contribution to overall tax revenue despite constitutional responsibility for several important tax domains, particularly services taxation.

The FY27 target signals the IMF’s expectation that provincial governments will play a larger role in Pakistan’s fiscal consolidation efforts as authorities seek to broaden the tax base and sustain economic reforms under the Fund-supported programme.