ISLAMABAD (MNN); Pakistan is preparing to introduce the federal budget for fiscal year 2026-27 under an ambitious revenue framework agreed with the International Monetary Fund (IMF), with the country expected to generate Rs17.145 trillion in federal revenues through new taxation and policy reforms.
According to the IMFâs latest staff report issued after the completion of the third review of the $7 billion Extended Fund Facility and the second review of the $1.4 billion Resilience and Sustainability Facility, Pakistan has committed to a series of fiscal and administrative measures aimed at strengthening revenues and maintaining economic discipline.
The report states that the federal revenue target for the next fiscal year stands at Rs17.145 trillion, representing an increase of more than Rs2 trillion compared to the current fiscal year. To meet this goal, the government is expected to introduce approximately Rs430 billion in additional budgetary measures, alongside an 18 per cent increase in the petroleum levy.
The Federal Board of Revenueâs collection target for FY2026-27 has been projected at Rs15.264 trillion â nearly Rs1.84 trillion higher than the current year. The IMF estimates that this increase will come through economic growth, inflation-linked expansion, tax reforms, stricter enforcement and improved digital monitoring.
The report notes that Pakistan undertook several prior actions before the IMF approved a combined $1.3 billion disbursement. These included reduced grants to provinces, recoveries linked to court decisions on super tax, and passing on fuel price adjustments to consumers.
Meanwhile, the Benazir Income Support Programme is expected to be expanded, with support payments increasing from Rs14,500 to Rs18,000 per family to cushion vulnerable households from inflationary pressures.
Pakistanâs four provinces have also committed to increasing revenue collection through improved general sales tax on services and agricultural income tax. Combined provincial revenues are projected to rise to Rs1.95 trillion in FY2026-27.
The IMF report further projects defence spending at Rs2.665 trillion next year, while interest payments on debt are estimated at Rs7.8 trillion. The Public Sector Development Programme is expected to rise to Rs986 billion.
In the energy sector, Pakistan has pledged timely tariff adjustments in gas and electricity to ensure full cost recovery. Subsidies for low-income electricity consumers will gradually shift to targeted support through the Benazir Income Support Programme instead of the current billing-based mechanism.
Power sector subsidies have been capped at Rs830 billion for the next fiscal year, while the government has also committed to reducing circular debt and resolving outstanding disputes with K-Electric by September.
The IMF also expects Pakistan to move ahead with reforms including a national sugar policy, reduced government intervention in wheat and sugar markets, digitisation of government payments by 2027, and stronger anti-corruption oversight.
An IMF mission is currently in Pakistan to finalise budget proposals ahead of the federal budgetâs presentation to parliament later this month.
