IMF voices concern over delayed reforms, presses for tax on agricultural income

ISLAMABAD: The International Monetary Fund (IMF) has expressed concern over delays in some economic reforms in Pakistan.

According to sources, the global lender is unhappy with the slow pace of taxing agricultural income and bringing retailers into the tax net. The informal economy in the country is very large, and putting pressure on shopkeepers alone is not enough.

Sources said the provincial governments failed to register the agricultural sector for the tax net. The target for tax returns from the agricultural sector was not met during the financial year 2025-26.

The IMF has voiced concern over the continued tax breaks and exemptions in the agricultural sector. It has pressed for a tax-to-GDP ratio of at least 15 per cent.

The lender called for more spending on human resource development, including health and education. It also described progress on tax reforms as unsatisfactory.

According to sources, the Ministry of Finance has been stuck at a limited tax-to-GDP ratio for several years. Widening the tax base is necessary for a strong state system.

The IMF has stressed the need to ensure uniform tax rates across different sources. It has described the pace of reforms in the agriculture and retail sectors as unsatisfactory.