Pakistan’s fiscal outlook for 2026-27 is being shaped under a broad set of commitments agreed with the International Monetary Fund (IMF), featuring higher revenue targets, fresh policy steps and increased reliance on fuel levies and tax enforcement measures.
According to an IMF staff report following the third review of the $7bn Extended Fund Facility and second review of the $1.4bn Resilience and Sustainability Facility, total federal revenues for the upcoming fiscal year are projected at Rs17.145 trillion. This marks an increase of more than Rs2 trillion compared with the current year, driven by both economic growth assumptions and new budget measures.
The report highlights that Pakistan had to complete several prior actions before the latest disbursement of $1.3bn was approved. These included adjustments in provincial transfers, tax recoveries linked to court rulings on the super tax, and the full pass-through of fuel price changes.
On the revenue side, the Federal Board of Revenue’s collection target has been set at Rs15.264 trillion for FY27. The IMF expects part of this growth to come naturally from inflation and economic expansion, while the rest depends on administrative reforms, digital enforcement and stronger compliance.
Provinces are also expected to play a bigger role, with nearly Rs430 billion in additional mobilisation commitments. Together, provincial revenues are projected to rise to Rs1.95 trillion, supported by improved taxation on services and agricultural income. The provinces are also expected to contribute a larger cash surplus to the centre.
A key feature of the plan is a sharp rise in the petroleum levy target, set at Rs1.73 trillion for FY27, reflecting expectations of higher fuel-based revenue. Officials and the IMF have also discussed increasing the average levy rate further in the coming year.
On spending, defence outlay is projected to rise to Rs2.665 trillion, while debt servicing is expected to climb to Rs7.8 trillion. Development spending at both federal and provincial levels is also set to increase, although power subsidies are being reduced and redirected towards targeted support through social welfare programmes.
The IMF has also linked future reforms to governance changes, including tax policy enforcement, energy pricing adjustments, and plans to reduce state intervention in commodity markets such as wheat and sugar.
An IMF mission is currently in Pakistan to finalise budget estimates ahead of the federal budget for 2026-27.
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