Pakistan and the International Monetary Fund (IMF) have agreed to revise the country’s fiscal framework, reducing the Federal Board of Revenue’s (FBR) annual tax collection target from Rs. 12.97 trillion to Rs. 12.35 trillion for the current fiscal year.

The Rs. 620 billion reduction comes amid economic challenges but maintains the previously agreed tax-to-GDP ratio of 10.6 percent, according to officials familiar with the negotiations.

“There will be no mini-budget,” a senior government official confirmed. “We have successfully convinced the FBR to adjust our target in line with the downward revision in nominal growth figures.”

The adjustment follows an already recorded revenue shortfall of Rs. 0.6 trillion during the first eight months of the fiscal year. Under the revised framework, collection expectations for the remaining four months (March through June) will be adjusted downward accordingly.

As a condition of the agreement, the IMF has required Pakistan’s finance ministry to provide written assurance that government expenditures will be proportionally reduced to maintain the Rs. 2.4 trillion primary surplus target for the current fiscal year.

Officials described the agreement as a “major breakthrough” in the ongoing first review under Pakistan’s $7 billion Extended Fund Facility. Policy-level talks are expected to conclude today, with both sides planning to develop the next budgetary framework through virtual discussions or a possible IMF mission visit in early May to finalize the 2025-26 budget.

The revised framework also includes significant adjustments to economic projections. The size of Pakistan’s economy has been revised downward from Rs. 123 trillion to Rs. 116.5 trillion for the current fiscal year. Real GDP growth expectations have been lowered from 3.6 percent to between 2 and 2.25 percent, while average inflation projections have been reduced from 12.5 percent to 7 percent.