Pakistan and the IMF are close to finalizing a revised fiscal framework for FY26, under which the Federal Board of Revenue’s (FBR) tax collection target will be reduced to Rs13.45 trillion by June 2026. The discussions are part of a staff-level agreement under the $7 billion Extended Fund Facility.

The FBR is unlikely to meet the earlier 11% tax-to-GDP target, posting a Rs428 billion shortfall in the first eight months. The revised projection expects a tax-to-GDP ratio of 10.6%, up from 10.3% in FY25, translating into Rs13.45 trillion in collections.

The original parliamentary-approved target of Rs14.13 trillion was first revised to Rs13.979 trillion with IMF consent. The Ministry of Finance will need to adjust expenditures to maintain fiscal deficit and primary surplus targets.

Pakistan’s GDP growth is projected at 4% for FY26, while CPI inflation is now expected at 7–7.5% due to rising fuel prices amid Gulf tensions. On the external front, the State Bank of Pakistan continues dollar purchases to bolster reserves, keeping the current account deficit within 0–1% of GDP.