The International Monetary Fund (IMF) has forecasted a Rs490 billion shortfall in the Federal Board of Revenue’s (FBR) annual tax collection target, projecting total revenues to reach Rs12,480 billion against the planned Rs12,970 billion.
This projection places the government in a difficult position, requiring either spending cuts or fresh tax measures to bridge the fiscal gap.
The IMF is expected to present the finance ministry with two options — either implement proportional spending cuts to prevent the budget deficit from widening or introduce additional revenue measures through an immediate mini-budget.
The final decision will be made during the upcoming policy-level discussions between the government and IMF, set to begin next week.
Meanwhile, the government has devised an alternative strategy to cover the Rs600 billion revenue shortfall: instead of introducing a mini-budget, it will settle ongoing tax cases in courts.
The International Monetary Fund (IMF) has been briefed on the plan to meet the shortfall through tax settlements. Prime Minister Shehbaz Sharif has pledged full cooperation in expediting these cases.
The Chief Justice of the Supreme Court has approved the government’s request for early hearings of tax-related cases, with a crucial hearing on the super tax scheduled for March 10, according to Mettis Global report.
The Federal Board of Revenue (FBR) expects to secure Rs157 billion under the super tax provision. Additionally, Rs23 billion has been won under Clause 99D of the windfall profit tax, while Rs72 billion has been collected from the advance deposit ratio tax in banks.
