Provinces have been legally required to strengthen their own tax collection under a fiscal agreement reached with the federal government as part of Pakistan’s International Monetary Fund programme, with the move aimed at reducing reliance on federal transfers and improving the country’s overall fiscal position.
Adviser to the Finance Minister Khurram Schehzad said revenue collection remained on track during the first two months of the current fiscal year. Speaking in an interview on the Pakistan & Counting YouTube channel, he said the Federal Board of Revenue had achieved its tax collection target for July and August, matching the amount projected for the period under the FY27 revenue plan.
According to Schehzad, the government’s revenue performance will be an important part of discussions when the International Monetary Fund delegation arrives in Islamabad on September 23. The mission is expected to review Pakistan’s economic performance and progress on commitments agreed under the ongoing IMF programme, making tax collection and fiscal management key areas of assessment.
Schehzad said a formal fiscal agreement between the federal government and the provinces has created a legal obligation for provincial administrations to improve their own revenue collection. Under the arrangement, provinces are expected to optimise their tax revenues and contribute to the broader consolidated fiscal framework instead of depending primarily on their guaranteed share from the federal divisible pool.
The adviser also referred to legislation passed by all four provincial assemblies last year to enforce agricultural income tax. The measure was included as a structural benchmark under Pakistan’s IMF programme and was presented as evidence that the government and provincial administrations had taken steps to meet previously agreed fiscal commitments.
The increased focus on provincial revenue collection comes as Pakistan seeks to strengthen its fiscal position and improve domestic resource mobilisation. Greater provincial tax collection is expected to play a role in reducing pressure on federal finances while ensuring that provincial governments contribute more directly to the country’s overall revenue framework.
Schehzad also expressed confidence that the government would be able to achieve its collection target under the newly announced retail tax scheme. The performance of this initiative will be closely watched as the government works to broaden the tax base and increase revenue from sectors that have historically remained difficult to document and tax effectively.
The government’s ability to maintain the Federal Board of Revenue’s collection performance while improving provincial tax mobilisation will be important during the upcoming IMF review. Meeting agreed revenue commitments could support Pakistan’s efforts to remain on track with its programme targets, while any shortfall could increase pressure for additional fiscal measures.
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