EDITORIAL: The Federal Board of Revenue (FBR) collected 12.957 trillion rupees last fiscal year (1 July 2025 to 30 June 2026) – an amount that is lower than the 12.983 trillion rupees projected in the 2026-27 budget documents by 26 billion rupees.
The budgeted FBR collection target was revised downward twice during last year – a trend that has been evident in previous fiscal years as well, requiring adjustments in other key macroeconomic data, including the budgeted deficit as well as the share of the provinces in the divisible pool.
Gross collection for 2025-26 is estimated at over 13 trillion rupees but given that FBR released refunds to the tune of over 40 billion rupees, a long-standing legitimate demand of the business community, particularly exporters, net collections were appropriately adjusted and at the end of the fiscal year were 92 percent of the total (14.131 trillion rupees) budgeted for the year – a shortfall that indicates the over-ambitious target set jointly by the government and the International Monetary Fund (IMF), given that the latter’s approval of the budget is a condition of the ongoing programme loan.
The budgeted tax target for the current year is set at 15.2643 trillion rupees – a target which envisages a rise of nearly 18 percent from what was actually achieved last year that, additionally, requires a 4 percent projected growth rate and the implementation of all aspects of the Finance Bill 2026 – conditions that are challenging, given the severely contractionary monetary and fiscal policies in place today as agreed with the IMF.
Independent economists and tax consultants have already expressed their reservations about the ability of FBR to meet this target on the grounds that the continuation of severely contractionary monetary and fiscal policies would certainly act as a major impediment in the new fiscal year.
Pakistani budgets have typically set unrealistic FBR targets to show a budget deficit that is sustainable and as and when these over ambitious targets are not met adjustments are typically made through: (i) slashing the Public Sector Development Programme (PSDP) – a trend that is all the more prevalent in years when the country is on an IMF programme as, unfortunately, it has been for most of its seventy-nine year-long history. Currently, Pakistan is on its twenty-fourth IMF programme with the average duration of three years; (ii) compelling the FBR to take punitive measures that have raised litigation costs of the Board as those with grievances seek legal remedies and in time also fuel capital flight; and (iii) borrowing more than was budgeted – a highly inflationary policy that accounts for the ever rising mark-up component in our budgets.
The budgeted mark-up in the current year is a whopping 46 percent of the entire current expenditure – the same percentage as in the revised estimates of last year even though the mark-up declined significantly as the policy rate was reduced.
To conclude, realistic revenue targets are critical for the achievement of key macroeconomic targets, which the country has consistently failed to meet.
Copyright Business Recorder, 2026
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