By Riaz Hussain :
Pakistan’s tax authority, the Federal Board of Revenue (FBR), has missed its first-quarter revenue collection target for FY2025-26, raising concerns over the country’s ability to meet its ambitious annual tax target and casting a shadow over upcoming talks with the International Monetary Fund (IMF).
According to provisional data, the FBR collected Rs2,886 billion between July and September 2025, against a target of Rs3,080 billion, leaving a shortfall of Rs194 billion. Officials believe that even after final adjustments, the gap is likely to remain above Rs150 billion.September’s performance was particularly weak, with collections of Rs1,230 billion falling short of the Rs1,368 billion monthly target, accounting for the bulk of the quarter’s underperformance.
For FY2025-26, the government has set an ambitious annual tax target of Rs14,131 billion, a goal that now looks increasingly challenging given the early setback.
Risks for IMF Negotiations
The revenue miss has several implications for Pakistan’s ongoing IMF program:
High hurdle ahead: The first-quarter shortfall consumes much of the “fiscal buffer” in projections, meaning stronger overperformance will be required in the remaining quarters.
Credibility at stake: The IMF mission is expected to demand credible plans for bridging the gap, especially given the steep revenue target.Conditionality pressure: Continued underperformance could endanger future IMF disbursements or lead to additional prior actions being imposed.
Market confidence: Persistent fiscal slippages weaken investor trust and could raise borrowing costs while reducing the likelihood of fresh external support.
Possible Next Steps
To address the situation, officials are considering a recovery roadmap for the IMF, strengthening FBR enforcement, reassessing overly optimistic projections, and improving communication with markets and stakeholders to preserve confidence.Outlook
The Rs194 billion shortfall underscores the fragile margin for error Pakistan faces in FY2025-26. With an IMF review on the horizon, Islamabad must convincingly demonstrate its ability to not only recover the early gap but also sustain momentum to achieve its record revenue target.
