FBR faces Rs604bn shortfall ahead of IMF review mission

ISLAMABAD: Just ahead of the visit of the IMF review mission to Pakistan, the FBR’s shortfall has further widened and stood at Rs604 billion in the first eight months (July-Feb) period of the current fiscal year.

With the target of Rs9,168 billion agreed upon with the IMF for March 31, 2025, the FBR will need to collect Rs1,825 billion in March — a month marked by Ramazan, holidays, and fewer working days, especially leading up to Eidul Fitr.

According to details available with The News, the FBR has fetched Rs7,343 billion in the first eight months of the current fiscal year against the set target of Rs7,947 billion, witnessing a shortfall of Rs604 billion. Now only two options have left with the Pakistani negotiators: either to request the IMF for slashing the FBR tax collection target, or use available fiscal space on account of reduced debt servicing to maintain the desired fiscal deficit within the desired limits.

The upcoming IMF talks have become crucial in the aftermath of massive shortfall in achieving revenue collection in the first eight months of the current fiscal year. Keeping in view this pace, it can be assumed that the revenue collection target will be missed out exceeding Rs1,000 billion mark till June-end, June 2025. The IMF’s review mission is scheduled to arrive in Islamabad this weekend and kick-start parleys from Monday, March 3, 2025, for completion of the first review and release of $1 billion tranche under $7 billion Extended Fund Facility (EFF). Pakistan had also made a request to augment the EFF loan with additional $1 billion under RSF to jack up the loan amount up to $8 billion.

Ahead of the IMF review parleys, the FBR faced shocks for materialising a whopping revenue shortfall during the outgoing month (February 2025) as it widened to Rs136 billion. The FBR could collect only Rs847 billion in February 2025 against the desired target of Rs983 billion, so the shortfall stood at Rs136 billion.

The FBR’s gross collection in February 2025 stood at Rs885 billion, out of which the tax machinery issued refunds of Rs37 billion, so the net collection was hovering around Rs847-848 billion. The FBR has collected Rs347 billion in the form of Income Tax, Sales Tax Rs367 billion, Customs Rs106 billion, and Rs65 billion as Federal Excise Duty (FED), in February 2025. The revenue shortfall continues to widen further with passage of every month as the provisional collection figure for Feb 2025 shows that the FBR has made a collection of Rs847 billion against the desired target of Rs983 billion. Ironically, the FBR’s collection in February 2025 was lower than January 2025 when it had fetched Rs872 billion. The shortfall in the first seven months stood at Rs468 billion, so with addition of Rs136 billion in February, the overall shortfall went up to Rs604 billion in the first eight months of the current fiscal year.