Government to Address Rs853 Billion Statistical Discrepancy

Pakistan has assured the International Monetary Fund (IMF) that it will provide additional details to explain an Rs853 billion statistical discrepancy identified in the accounts of federal and provincial governments for FY2025-26.

 

According to officials, the IMF raised questions about discrepancies across five governments, with Rs448 billion attributed to federal accounts. The government explained that much of the mismatch was linked to provincial investments in treasury papers, differences between cash withdrawals and actual expenditures, and transactions recorded across financial years.

 

Punjab reported a discrepancy of around Rs266 billion. Provincial officials attributed it partly to commercial account operations, differences in federal and provincial accounting procedures and delays in releasing development funds near the end of the fiscal year.

 

Officials said cheques issued before June 30 can result in accounting entries being recorded before the actual cash leaves government accounts, with some payments taking place after the financial year closes.

 

The incomplete implementation of the Treasury Single Account was also cited as a contributing factor, as some government entities continue to hold funds outside the central account.

 

The government told the IMF that the discrepancy would not affect the reported primary budget surplus of 2.9% of GDP, a key condition under Pakistan’s IMF programme. The ongoing programme review is expected to conclude on October 7.

 

Agriculture Tax Collection Remains Weak

 

The IMF also reviewed provincial agricultural income tax collections following the increase in rates from 15% to 45%.

 

Sindh collected Rs1.1 billion against a previous target of Rs2 billion, while Punjab collected Rs4 billion against its Rs10.5 billion target. For the current fiscal year, Sindh has set a Rs6 billion target and Punjab has targeted Rs12.5 billion.

 

Sindh has introduced digital registration and filing mechanisms after transferring agricultural income tax administration to the Sindh Revenue Board. The province has registered 3,650 taxpayers and received 1,912 returns, while the FBR has shared agricultural income data for 44,350 taxpayers.

 

The IMF also questioned the Federal Board of Revenue’s tax performance. The FBR missed its revised FY2025-26 target by Rs929 billion, while officials said the current year’s revenue performance could be affected by developments in the regional security situation.

 

The FBR has nevertheless assured the IMF that it expects to meet key performance indicators, including digital invoicing and production-line monitoring, as well as its first-quarter revenue target of Rs7 trillion.