Major Progress in IMF Talks: Mini-Budget Avoided, No GST on Petroleum

Pakistan has secured a crucial breakthrough in its negotiations with the International Monetary Fund (IMF), resulting in the decision to forgo a mini-budget, a move that would have introduced new taxes and economic strain.

The Federal Board of Revenue (FBR) confirmed that the fiscal target of PKR 12.97 trillion remains intact, and there will be no implementation of General Sales Tax (GST) on petroleum products. The IMF has expressed satisfaction with Pakistan’s tax collection progress.

The tax-to-GDP ratio has seen a notable rise from 8.8% to 10.3%, a 1.5% improvement that the IMF acknowledged as a positive development. In a significant policy shift, tax collection from agricultural income is expected to begin next year, further broadening the revenue base.

The talks are set to continue, with upcoming discussions focused on potential adjustments to business-friendly schemes. The FBR reported PKR 12 billion in tax revenue collected from retailers over the past three months, along with the registration of 400,000 new traders, raising the total number of registered taxpayers from 200,000 to 600,000.