IMF Raises Concerns over Rs.853 Billion Statistical Discrepancy in Governments’ Financial Accounts

Pakistan has assured the International Monetary Fund (IMF) that it will provide further details regarding a Rs853 billion statistical discrepancy in the financial accounts of the federal and provincial governments in order to address the international lender’s concerns.

Meanwhile, there has also been no significant increase in agricultural income tax collections. During the last fiscal year, the combined collections by Punjab and Sindh remained just above Rs5 billion.  According to sources, the IMF mission visiting Pakistan held meetings on the large statistical discrepancies in the budget accounts of the federal and provincial governments, substantial block allocations in the federal budget, agricultural income tax collections, and federal revenue targets. Government officials said the Federal Board of Revenue (FBR) has made the achievement of its annual tax target of Rs15.263 trillion conditional on the situation in the Middle East and its potential impact on the Pakistani economy.

Sources said the IMF sought a briefing from the Ministry of Finance on the Rs853 billion statistical discrepancies identified in the accounts of the federal government and the four provincial governments during fiscal year 2025–26. Of the total amount, Rs448 billion was attributed to the federal government’s accounts. However, the IMF was informed that the discrepancy had primarily arisen because of differences in the timing of provincial governments’ investments in treasury papers, withdrawal of funds before the end of June, and the recording of actual expenditures in July or later.

An Rs266 billion statistical discrepancy was identified in Punjab government accounts. According to an official of the Punjab Finance Department, the main reason was related to commercial accounts and differences between the inflows and outflows of funds in these accounts during the year. The provincial government also said that differences in the accounting methods used by the federal and provincial governments were another contributing factor. Due to delays in the release of development funds until June, substantial amounts remain unused. To utilize these funds, cheques are issued before the end of June; however, actual payments from Account-I are made after June 30. The Ministry of Finance has assured the IMF that further details will be provided to satisfy the mission. Officials said the statistical discrepancy would have no adverse impact on the government’s reported primary budget surplus, which is equivalent to 2.9% of gross domestic product (GDP).

According to sources, the IMF also sought details from the provincial governments regarding agricultural income tax collections after the rate was increased from 15% to 45%. The 45% agricultural income tax rate is equivalent to the tax rate applicable to business income. The IMF was informed that agricultural income tax collections remained extremely low during the last fiscal year, while there are also concerns that Punjab and Sindh may fail to meet their targets during the current fiscal year. According to details provided to the IMF, the Sindh government had set a target of Rs2 billion in agricultural income tax collections during the last fiscal year, but collected only Rs1.1 billion. According to Punjab government budget documents, the agricultural income tax collection target for the last fiscal year was Rs10.5 billion, but actual collections amounted to only Rs4 billion. Punjab has set a target of Rs12.5 billion for agricultural income tax collections in the current fiscal year.

The FBR has provided the Sindh government with data on 44,350 individuals who declared agricultural income in their tax returns for tax year 2025. However, the provincial government maintains that a real-time mechanism is needed for the immediate exchange of information between the FBR and the Sindh Revenue Board. The Sindh government has already transferred the administrative responsibility for agricultural income tax from the Board of Revenue to the Sindh Revenue Board. It has also introduced a digital system for taxpayer registration and filing of returns. So far, 3,650 registrations have been completed and 1,912 tax returns have been filed under the new system.

FBR Links Annual Tax Target to Middle East Situation

The FBR has also linked the achievement of its annual tax target to developments in the Middle East. The IMF received a briefing from the FBR on the substantial shortfall in the tax target during the last fiscal year and the prospects for revenue collection during the current fiscal year. The IMF was assured that the FBR would achieve all key performance indicators, including targets related to digital invoicing and monitoring of production lines. It also assured the mission that the Rs7 trillion target set for the first quarter would be achieved. However, according to sources, the FBR did not give an unequivocal assurance that it would achieve the overall Rs15.263 trillion tax targets for the current fiscal year.

The FBR informed the IMF that achievement of the annual target would depend on how the security situation in the region, particularly developments in the Middle East, evolves and what impact these developments have on Pakistan’s economy. Meanwhile, on the first day of formal talks between Pakistan and the IMF, government officials briefed the mission on financial and administrative matters. According to sources, officials from the FBR, Establishment Division, and Finance Division held meetings with the mission. The policy wings of FBR Customs and Inland Revenue also briefed the mission on their performance and other matters. The mission was also briefed on legislation concerning the declaration of assets by government employees. Officials said a new Section 15-A had been added to the Civil Servants Act, enabling the government to regulate and monitor the financial conduct of civil servants. Officials from Grade 17 to Grade 22 will be required to declare their assets, and details of their assets will be made available on a government website.