The International Monetary Fund (IMF) has set an ambitious target for Pakistan’s provincial governments to boost tax collection by nearly 64% in the upcoming fiscal year, underscoring growing pressure on the provinces to contribute more aggressively to revenue mobilization efforts.
According to documents pertaining to the IMF’s 37-month Extended Fund Facility (EFF), the consolidated net tax revenues collected by provincial revenue authorities are projected to reach Rs. 1.947 trillion by the end of June 2027, against an estimated Rs. 1.190 trillion in FY26, an increase of about Rs. 757 billion, or 63.6%.
The target is set as an indicative benchmark under the ongoing IMF program and reflects the lender’s emphasis on strengthening provincial tax administration and expanding revenue streams beyond the federal level. Under a quarterly roadmap, provincial tax authorities are expected to collect Rs. 389 billion by September 2026; Rs. 798 billion by December 2026; and Rs. 1.285 trillion by March 2027, culminating in the annual target of Rs. 1.947 trillion.
The higher collection targets comes as Pakistan seeks to improve fiscal sustainability and reduce its dependence on borrowing while meeting strict IMF conditions tied to continued financial support. The lender has also envisaged a significant increase in overall tax revenues, with the Federal Board of Revenue (FBR) tasked with collecting Rs. 15.264 trillion in net taxes by June 2027.
Economists say the provincial revenue target requires stronger enforcement of sales tax on services, better documentation of businesses and expanded use of digital tax administration systems, particularly in the country’s major urban centers. It also aligns with increasing scrutiny from the IMF over the relatively low contribution of provinces to overall tax revenues, despite constitutional responsibility for several important tax domains, particularly the services sector.
The FY27 target signals the IMF’s expectation that provincial governments would play a larger role in Pakistan’s fiscal consolidation efforts as authorities attempt to broaden the tax base and sustain economic reforms under the Fund-supported program.