PAKISTAN’S economy, most importantly, remains afloat for another six months or so.
Had even this target not been achieved, all the economic austerity and tariff pains endured by the people over the past 18 months would have been for naught.
The IMF Executive Board is set to consider approving approximately $2.3 billion in loans, with expectations that Islamabad will secure the funds in the first week of May 2025, ahead of the FY 2025-26 budget.
This is also when an IMF mission is expected to visit Pakistan to help finalize the next budget, with a particular focus on taxation measures and curtailing unbridled expenditure.
The federal government has started the budgeting process, setting targets for the new fiscal year.
The Ministry of Finance has estimated total revenue of Rs15,270 billion, with an increase of Rs2,300 billion in FBR tax collection for the new fiscal year 2025-26 starting from July 1, compared to the target for the current fiscal year 2024-25 ending on June 30.
The FBR’s tax collection for the upcoming fiscal year 2025.26 has been estimated at Rs.15,270 billion, which is Rs.2,300 billion more than the target of Rs.12,970 billion set for the current fiscal year 2024.25, while the FBR’s tax revenues in the previous fiscal year 2023-24 were Rs.9,311 billion.
Direct tax collection for the next fiscal year has been estimated at Rs.6,570 billion and the target for direct tax collection for the current fiscal year is Rs.5,512 billion.
The volume of direct tax collections in the previous fiscal year was Rs.4,531 billion.
Similarly, the sales tax collection for the upcoming fiscal year 2025-26 has been estimated at Rs.5,733 billion and the sales tax collection target for the current fiscal year has been set at Rs.4,919 billion.
In the last fiscal year, sales tax collection was Rs.3,099 billion.
For the new fiscal year, the estimated collection of customs duty is Rs.1,846 billion, and the target for customs duty collection for the current fiscal year is Rs.1,591 billion.
Last fiscal year, customs duty collection amounted to Rs.1,104 billion.
The federal excise duty collection for the next fiscal year has been estimated at Rs.1,120 billion, and the target for federal excise duty collection for the current fiscal year has been set at Rs.948 billion, while the federal excise duty collection in the previous fiscal year was Rs.577.5 billion.
Pakistan’s continued progression under the IMF programme has been secured, with IMF staff and Pakistani authorities reaching a staff-level agreement on the first review under the country’s 37-month Extended Fund Facility (EFF) on Wednesday.
The SLA also included a new 28-month arrangement under the Resilience and Sustainable Facility (RSF).
This is certainly good news, when it comes to the RSF part, which aims to support Pakistan’s climate change resilience, mitigation and adaptation and natural disaster management efforts.
The RSF will also reportedly help support water management and align energy sector reforms with climate change mitigation targets.
Pakistan cannot afford and, in that context, it is no surprise that a programme geared towards making Pakistan live within its means has seen growth come to a virtual standstill.
That being said, no matter how hard-won and essential macroeconomic stability is, this is only the first step.
The country still faces the challenge of moving beyond a fundamentally broken, import-heavy growth model.
The country’s long-awaited transition to a more competitive and export-led model of growth still remains elusive.
In fact, even with what little growth Pakistan has had since signing the EFF back in September 2024, the country was back in a current account deficit of $420 million by January and remained in the red in February too.
As a result, ordinary people have seen their bills and cost of living balloon while salaries and job opportunities either remain the same or dwindle.
The country’s long-awaited transition to a more competitive and export-led model of growth still remains elusive.
In fact, even with what little growth Pakistan has had since signing the EFF back in September 2024, the country was back in a current account deficit of $420 million by January and remained in the red in February too.
Turning this picture around on a permanent basis must be one of the main aims going forward, enabling the country to grow in a more sustainable manner where it does not have to keep going back to the IMF every few years.
The path toward this goal will require confronting powerful constituencies accustomed to the old import-based system, including the country’s failing SOEs.
Privatizing the latter is something the state has attempted for almost two decades, with little to show for it.
The IMF may have allowed some leeway this time, but there is no certainty this will continue in the next review.
The poor have already been squeezed to the maximum; it is now the turn of the big fish to make the necessary sacrifices for the country’s economic future.
Pakistan must stay on the tough fiscal path outlined by the IMF.
In this context, the FBR’s struggles to meet revenue collection targets are concerning.
Prime Minister Shehbaz Sharif is seriously worried about balancing the federal budget.
He is striving to minimize the financial burden on the common man.
Overburdening the poor and underprivileged would be entirely unjustified.
Premier Shehbaz Sharif must mind the lifeline of the poor.
—The writer is author of several books based in UK. (naveedamankhan@hotmail.com)
