ISLAMABAD: Pakistan is poised to unveil a mini-budget before the upcoming national budget, likely introducing several new taxes on various goods to bridge the fiscal deficit.
Sources indicate that the government plans to implement additional revenue measures alongside expenditure cuts to achieve its financial targets. Key proposals include a 5% hike in excise duty on fertilizers and pesticides, as well as new levies on high-end sugar products.Pakistan has assured the International Monetary Fund (IMF) of its intention to impose an 18% sales tax on selected items as part of these revenue-raising efforts. The IMF’s assessment reveals that the country aims to boost its tax-to-GDP ratio to 15%, while also working to fill a USD 4 billion financing gap for the current fiscal year.
The country is expected to receive USD 2 billion in installments under the existing IMF programme, with an additional USD 1 billion potentially coming from the Saudi oil facility. Moreover, Pakistan is targeting external support of USD 504 million from the Asian Development Bank, USD 500 million from the World Bank, and about USD 250 million through international bond issuance.
To counterbalance the revenue shortfall, Pakistan has committed to taxing sectors such as fertilizers, pesticides, and surgical equipment. The upcoming Memorandum of Economic and Financial Policies (MEFP) incorporates these measures, along with several conditions, including a 5% Federal Excise Duty on fertilizers and pesticides.
The IMF also expects changes to the State-Owned Enterprises (SOE) law by August 2026. The government has pledged to impose further taxes if revenue collection falls short of expectations. Additionally, the IMF emphasizes the need for Pakistan to fully deregulate the sugar industry.The Fund continues to support reforms in energy tariffs, cost management, and structural adjustments. Over the next two years, all major retailers around 40,000 nationwide, will be equipped with point-of-sale (POS) systems to improve tax compliance.
In FY2024, 5.2 million tax returns were filed, increasing to 7 million in FY2025. The MEFP also commits to harmonizing sales tax policies across all four provinces.
Only a small portion—10%—of the Public Sector Development Programme (PSDP) will be allocated to new projects, with priority given to ongoing initiatives worth approximately Rs2.5 trillion. The upcoming fiscal year will see a stronger emphasis on climate-related projects.
Transparency in public procurement will be enhanced through the adoption of electronic Public Access Delivery System (e-PADS), with the Auditor General scheduled to present a report to the President by March 2026.Starting January 2026, quarterly installments under the Kafalat Programme will rise to Rs14,500, and the program’s beneficiary base will expand to 10.2 million individuals. By June, biometric verification and an electronic wallet system will be introduced for BISP payments.
