Pakistan Pledges Rs200 Billion in Contingency Taxes to Meet IMF Conditions

Overview

• Authorities told the IMF they will trigger up to Rs200 billion in extra taxes only if July–December revenues miss targets or expenditures exceed agreed limits.
• Proposals shared by tax officials include raising the cash-withdrawal withholding for non-filers from 0.8% to 1.5%, increasing mobile-call and landline withholding rates, hiking sales tax on solar panels to 18%, and imposing a 16% federal excise duty on biscuits and similar processed foods.
• The contingent commitment helped secure a staff-level agreement to complete the second review of Pakistan’s $7 billion IMF program.
• The Federal Board of Revenue recorded a Rs198 billion shortfall in the first quarter, intensifying pressure to shore up collections against the annual target.
• Officials say activation would begin in January if needed, with roughly half the Rs200 billion expected to be realized in January–June 2026, as the government also weighs options such as a 19% standard sales tax or spending cuts after the IMF declined to lower the 1.6% primary surplus target.