The International Monetary Fund can lower the tax collection target to less than the RS12.5 trillion due to the total slowdown of financial activities and huge deficits that are so far slightly in one step that still requires to meet the remaining four months goals and partly recover some of the deficit.

Any reduction in the target against the original target of over RS12.9 trillion depends on the Ministry of Finance’s ability to reduce the cost of protecting the overall IMF program goal to generate RS1.2 trillion primarily budget surplus in this financial year, according to public sources dealing with the IMF team.

The IMF also asked the Ministry of Energy to share its projections of the circular debt for the next financial year 2025-26. The power department assured the IMF that circular debt in this financial year will remain under the agreed threshold of RS2,429 trillion.

The IMF and Pakistani authorities met Wednesday to the third day in a row to discuss the energy sector’s results, progress with publications from various social and economic studies of the Pakistan Bureau of Statistics. The discussions were also held about the budget numbers and the requirements for external financing.

The government sources said that both sides discussed the possibility of lowering the tax target between RS12.3 trillion to RS12.5 trillion. The tax authorities proposed to reduce the target of RS579 billion against the annual target of RS12,913 trillion, they added.

The sources said the IMF indicated to lower it with RS435 billion to less than RS12.5 trillion, but no formal decision has been made.

The tax authorities were of the opinion that the trend of the last four years suggested that they could achieve the remaining targets, but needed adjustment to the overall target.

FBR informed the IMF that it was comfortable to reach March’s tax collection target. But there may be a deficit against April and May goals that are expected to be recovered in June.

FBR has set a plan to lower the tax rates for tobacco, beverages and construction to get another RS90 billion through financial activities and better sales. Almost RS300 billion is claimed to be recovered through litigation.

In the pursuit of a very tax target of over RS12.9 trillion, the government had beaten RS1.3 trillion in additional taxes that mainly burden the existing paying people and sectors. However, it has already maintained deficits of RS606 billion during July-February. That grade was a victim and yet the goal could not be reached.

Due to lower than projected autonomous growth, FBR suffered a loss of approx. RS450 billion by February. No further deficits are expected on this account until June, according to the FBR officials.

The IMF has set the condition to generate a primary budget surplus equal to 1% of the size of the economy or slightly above RS1.2 trillion. Any reduction without adjusting expenses can compromise this target.

The sources said the Ministry of Finance had suffered tax space available to reduce expenses except to make another major adaptation in the public sector development program. There is a possibility that the Ministry of Finance may not release the budget in the fourth quarter, which blocks releases for the foreign funded projects.

The government had initially proposed RS1.4 trillion PSDP, which has already been cut down to RS1.1 trillion. But using during the first half was quite low, leaving a lot of space for further cuts in the development budget.

The Ministry of Finance also expects around RS50 billion savings against this year’s awarded grants to the electricity sector.

One of the possibilities of recovering some of the deficits is to recover advances on income tax in accordance with section 147 of the Income Tax Regulation. Authorities believe that around RS130 billion can be recovered by making extra efforts.

During the first seven months of this financial year, FBR RS929 Billion received income tax in advance under section 147, which was 27% higher than the corresponding period in the last year.

FBR informed the IMF that it recovered RS90 billion through enforcement measures during the first eight months of this financial year. But this came primarily from the banks due to income tax and increase in the basic income tax to 44%.

On Tuesday, Finance Minister Muhammad Aurangzeb The Express Pakinomist said the government would deplete other opportunities to do for the revenue deficit instead of taking additional income measures.

Pakistan Bureau of Statistics also gave an information to the IMF on the status of publication of various social and economic studies. These studies are critical of knowing the real economic and social health of society, as the government does not have the latest number of poverty, unemployment and agricultural counting.

PBS informed the IMF that field operations in the first ever digital provincial level in the household Integrated Economic Survey (HIES), 2024-25 are underway.

Hies gives a clear picture of literacy, out of school children, registration, children’s health, especially infant mortality, female health indicators and household income, savings, commitments and consumption expenses and consumption patterns at national and provincial level with urban and rural areas.

This study also contains necessary data for estimating consumption -based poverty. Out of a total of 62 goals for sustainable development, 31 indicators are covered by HIES studies, the IMF was told. The lender was informed that the HIC results will be published in December this year.

Pakistan has also launched the workforce survey 2024-25, and fieldwork is currently underway. The government told the IMF that the quarterly Labor Survey reports will not be published; Instead, an annual report will be published within six months of completion of fieldwork.