Govt Likely to Break Under IMF Pressure And Avoid Giving Relief in FY27 Budget

Pakistan’s upcoming FY27 federal budget is expected to remain focused on a discipline-first, relief-later approach to improve the tax-to-GDP ratio by 50 to 60 basis points.

Instead of new taxes, the federal government will try to reinforce the existing tax regime by improving tax collection under current measures. Relief will likely be next to nothing this time.

The federal budget is expected to be unveiled on June 5, 2026, as policymakers face mounting pressure to meet stricter revenue commitments under the IMF program.

According to Topline Securities, the Federal Board of Revenue (FBR) could receive a tax collection target of around Rs. 15.3 trillion, marking a 14 percent increase from the revised FY26 target. However, the challenge could become tougher if current-year collections fall short by another Rs. 200–250 billion.

Instead of relying heavily on broad-based new taxes, the government is expected to focus on plugging revenue leakages. Proposed measures may include stricter tax audits, enhanced sales tax monitoring, and stronger recovery efforts from sectors such as sugar, cement, tobacco, and fertilizer.

The budget will prioritize restraint in non-interest expenditures and tighter revenue enforcement over large-scale populist relief measures. Such an approach could help reassure international lenders and investors, particularly as rising oil prices and regional tensions continue to pressure Pakistan’s external account.

According to the preview, the core message of the FY27 budget is expected to be clear: fiscal discipline first, relief later.