The International Monetary Fund has urged Pakistan to move beyond stabilising the economy and push ahead faster with structural reforms, including widening the tax base and mobilising more revenue from the provinces, its Resident Representative in Pakistan said at a conference in Islamabad on Thursday, November 5, 2026.
What happened?
Dr Mahir Binici, the IMF’s Resident Representative in Pakistan, was speaking at the closing plenary of the 29th Sustainable Development Conference, organised by the Sustainable Development Policy Institute (SDPI) and titled “Where Reforms Matter the Most for Growth”.
He said Pakistan was at a historical juncture where the focus must shift from macroeconomic stabilisation towards economic transformation through faster implementation of reforms, stronger institutions and fairness in distributing their costs and benefits. He identified five key reform priorities: preserving macroeconomic stability, improving resource allocation, reducing the cost of doing business, developing a growth-friendly fiscal system and strengthening governance.
Key details
- Revenue mobilisation: emerging and developing economies such as Pakistan need to mobilise revenues equivalent to at least 15 per cent of GDP to build a strong state capable of delivering essential public services. Pakistan, however, remains considerably below this threshold.
- Untapped revenue: agriculture, real estate and provincial services taxation were identified as largely untapped sources, with agricultural income taxation and property taxation holding significant potential for the provinces.
- GST on services: harmonisation of the General Sales Tax on services across provinces was described as an important area where provincial governments could generate additional revenue. Provinces should strengthen their own revenue mobilisation rather than relying only on their share of federal tax collections.
- Reforms must be durable: the burden should be shared equitably, vulnerable households protected and the benefits visible to the public. Reforms must be properly sequenced and targeted so that economic transformation translates into tangible improvements in living standards.
- Human capital: combined health and education spending has increased from around 2 per cent of GDP over the past two years, with the objective of raising it to approximately 2.8 to 3 per cent during the current fiscal year — though allocations remain substantially below Pakistan’s requirements and spending levels in peer economies.
- Cost of doing business: high energy costs, taxation and multiple layers of taxes are discouraging businesses from maintaining existing investments, undertaking new projects and attracting foreign direct investment.
- Energy: Binici supported ongoing energy sector reforms, including tariff adjustments, improved governance of distribution companies and greater private-sector participation through privatisation to improve efficiency, service delivery and energy security.
- Public spending should be directed towards high-return infrastructure, healthcare, education and targeted social protection, while private-sector credit should flow towards productive businesses rather than protected and preferential activities.
What it means for people in Pakistan
For households, the message is that the Fund wants the tax net widened to sectors that currently contribute little — agriculture, property and services — while protecting vulnerable people, rather than adding to the burden on those already paying. For businesses, the focus on energy costs, simpler taxation and a better business environment points to the areas the IMF sees as holding back investment and jobs. The pace matters, Binici said, because the window of opportunity could narrow amid an increasingly volatile domestic and international environment.
Source: https://newsman.pk/sdpi-sdc-imf-urges-deeper-reforms-provincial-tax-mobilization/
