ISLAMABAD: Pakistan is facing fresh fiscal negotiations with the International Monetary Fund (IMF) ahead of the 2026–27 federal budget, with discussions focusing on potential new tax measures.
According to official sources, the IMF has proposed increasing the standard General Sales Tax (GST) rate from 18% to 19% to help bridge revenue shortfalls. Pakistani authorities have reportedly resisted the suggestion, citing concerns over inflationary pressures on consumers.
The proposal comes amid concerns over weaker-than-expected tax collection performance by the Federal Board of Revenue (FBR). Estimates suggest that even a 1% GST increase could generate additional revenue of around Rs250–300 billion.
Discussions are also underway on tax adjustments for hybrid vehicles, retailers, and possible relief measures for salaried individuals, while alternative revenue options are being explored to meet fiscal targets.
Negotiations between Pakistan and the IMF are expected to continue in the lead-up to the budget announcement, with further revisions likely during the parliamentary approval process.
