Zafar Iqbal
Numbers do not lie, but budgets often do. The Federal Board of Revenue collected 12.957 trillion rupees in the fiscal year that closed on 30 June 2026, falling short of the 12.983 trillion rupees projected in the 2026-27 budget documents by 26 billion rupees. On the surface, this appears a minor shortfall, a rounding error in the vast machinery of state finance. Look closer, and a familiar pattern emerges, one that has repeated itself year after year, budget after budget, promise after broken promise.
The target itself was revised downward not once but twice during the course of the year. This is not an aberration. It is a habit, a ritual performed each fiscal year, in which ambitious numbers are announced with confidence in June, only to be quietly diluted by December, and diluted again by March. Such revisions do not occur in isolation. They ripple outward, forcing adjustments in the budgeted fiscal deficit and in the share of the provinces in the divisible pool, disturbing the delicate arithmetic on which the entire federation’s fiscal relations depend.
Consider the gross collection figure. FBR gathered over 13 trillion rupees in gross terms, a number that might have satisfied budget-makers had it stood alone. But refunds worth over 40 billion rupees were released to businesses, particularly exporters, who had waited long and legitimately for what was owed to them. Once these refunds were accounted for, net collections settled at only 92 percent of the originally budgeted 14.131 trillion rupees. Here lies the real story: a target set not by careful domestic assessment but jointly by the government and the International Monetary Fund, whose approval of the budget remains, as it has for decades, a condition of the ongoing programme loan. Ambition dictated by an external lender rarely aligns with the ground realities of a struggling economy, and this year proved no exception.
Now turn to the year ahead. The budgeted tax target for the current fiscal year stands at a staggering 15.2643 trillion rupees, a rise of nearly 18 percent over what was actually achieved last year. This target assumes a 4 percent growth rate and the full implementation of every provision of the Finance Bill 2026. Ask any independent economist, ask any tax consultant who has watched these cycles unfold, and the answer will be the same: such assumptions are difficult to reconcile with a policy environment defined by severe monetary and fiscal contraction, contraction agreed to, once again, with the IMF. One cannot tighten the economy with one hand and expect revenue to expand with the other. Economics, unlike politics, does not forgive contradictions.
Why does this pattern persist? Pakistani budgets have long set unrealistic FBR targets, not out of ignorance, but out of necessity, to project a budget deficit that appears sustainable on paper. When these targets inevitably go unmet, the government resorts to three familiar remedies. First, it slashes the Public Sector Development Programme, sacrificing roads, schools, and hospitals on the altar of fiscal optics, a sacrifice made more frequent whenever the country finds itself under an IMF programme, which is to say, for most of its seventy-nine year history. Pakistan is currently in its twenty-fourth such programme, with an average duration of three years, a statistic that should embarrass policymakers more than it apparently does. Second, the government compels FBR to adopt punitive measures against taxpayers, measures that raise litigation costs, clog the courts with grievances, and in time drive capital away from the country altogether. Third, the state borrows more than it budgeted, a policy that is inherently inflationary and explains the ever-rising mark-up component that dominates our national accounts.
Indeed, the budgeted mark-up in the current year consumes a staggering 46 percent of entire current expenditure, precisely the same share as in the revised estimates of last year, even though the policy rate itself was reduced. Debt servicing devours what should have gone to development, to health, to education, to the ordinary citizen waiting for the state to deliver something beyond promises.
Realistic revenue targets are not a technical nicety. They are the foundation upon which every macroeconomic goal rests, from the deficit to debt sustainability to provincial harmony under the National Finance Commission. Pakistan has consistently failed to meet its self-set targets, and each failure erodes credibility a little further, both at home and before international lenders. The nation must ask itself an honest question: how long can a state continue budgeting for a future it does not believe in, and expect its people to believe in that future instead.
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