Islamabad is set to host the formal beginning of the second economic review meeting between Pakistan and the International Monetary Fund (IMF) as discussions on the country’s economic performance move forward.

According to sources, the IMF delegation will meet Federal Finance Minister Muhammad Aurangzeb tomorrow (Monday) for an initial round of briefings.

Top officials to join meeting

The meeting will also be attended by the finance secretary, the Federal Board of Revenue (FBR) chairman, and the governor of the State Bank of Pakistan, sources confirmed. The IMF delegation is expected to receive a detailed assessment of the country’s recent economic performance.

Also Read: IMF presses Pakistan on budget surplus, circular debt reforms

Key briefings on economic challenges

Officials will present explanations for Pakistan’s failure to meet its tax collection target. The delegation will also be briefed on pressing financial challenges, including:

Circular debt in the power sector
Electricity theft and recovery of bills
Budget expenditures and fiscal gaps
Status and arrangements of foreign debt repayments

Meetings across financial institutions

Beyond the session with the finance minister, the IMF delegation will hold separate meetings with FBR, energy, and finance ministry officials. These discussions are expected to play a critical role in shaping the next stage of Pakistan’s loan program.

Also Read: IMF concerned over Pakistan missing Rs12.97tr tax collection target

On Sept 26, Pakistan’s economic team held the second round of economic review talks with the International Monetary Fund (IMF), presenting detailed data on tax collection, fiscal performance, and revenue shortfalls. The IMF expressed concern over Pakistan’s inability to meet the tax collection target set for the last fiscal year.

Tax collection shortfall

During the briefing, the Federal Board of Revenue (FBR) disclosed that it collected Rs11.74 trillion against the annual target of Rs12.97 trillion. Officials cited multiple reasons for the shortfall, including declining inflation, sluggish economic activity, devastating floods, and delays in court decisions on tax cases.

More than Rs250 billion worth of tax cases remain pending in courts, further affecting revenue flows. The quarterly target of Rs3.1 trillion is also at risk, with officials warning that Rs140 billion would need to be collected daily to stay on track.

Also Read: Pakistan, IMF begin technical-level talks on tax revenue targets

Reasons behind missed targets

FBR officials explained that last year’s tax-to-GDP ratio target of 10.5% could not be achieved, with only a 1.4% increase recorded. They attributed this underperformance to multiple factors:

A slowdown in the real estate sector reduced revenue from new tax measures.
Non-tax revenues declined sharply due to reduced profits from the State Bank and a lower petroleum levy.
Floods further weakened economic activity and revenue collection.

Also Read: Pakistan opens old vehicle imports to meet IMF condition

Progress and achievements

Despite challenges, officials highlighted some fiscal achievements. The government managed to achieve the highest primary surplus in 24 years, reaching Rs 2.4 trillion. The fiscal deficit was limited to 5.4% of GDP, performing better than the target set.

Additionally, the number of income tax filers increased from seven million to 7.7 million compared to last year, reflecting an expanding tax base despite revenue challenges.