Pakistan must broaden tax base to achieve durable growth: IMF

October 20, 2026 (MLN): Pakistan must move from cyclical adjustments to durable growth by broadening its tax base, strengthening revenue administration, reducing tax expenditures and protecting priority social spending, the International Monetary Fund (IMF) said.

The remarks were made by Jihad Azour, IMF Director for the Middle East and Central Asia, while addressing the Pakistan Tax Conference in Islamabad.

He said Pakistan has made significant progress in restoring macroeconomic stability, strengthening external buffers and rebuilding economic confidence.

However, the country still faces vulnerabilities from high inflation, fiscal pressures, exposure to energy and food prices, and tightening global financing conditions. The reforms are supported by the IMF’s Extended Fund Facility (EFF).

On policy credibility, he said hard-won stabilization gains must be institutionalized through a medium-term tax strategy. This requires well-designed policies, ambitious sequencing and transparent implementation to build resilience and trust.

On economic growth, he said stabilization is necessary but not sufficient on its own, and Pakistan needs a simpler, more neutral and predictable tax system. Such a system would lower the cost of formality, improve resource allocation and give businesses the confidence to invest and expand.

On fairness, he said taxpayers are more likely to comply when rules are transparent and do not reward informality or provide preferential treatments. Achieving this requires addressing under-taxed sectors, rationalizing tax concessions and ensuring the tax burden is shared proportionally.

On implementation, he said strong reform ideas must be translated into durable results through administrative capacity and ownership across all levels of government.

This demands close coordination between federal and provincial authorities, active engagement with the private sector and civil society, and clear communication to build public trust.

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