Fuel Prices May Rise Again as IMF Sets Higher Tax Targets for Pakistan Budget 2026-27
Pakistanis could face another increase in fuel prices as the International Monetary Fund (IMF) has projected higher petroleum levy collections in the upcoming federal budget for fiscal year 2026-27.
According to the latest IMF estimates, the government is expected to continue relying heavily on fuel taxes to meet revenue targets under the ongoing economic reform programme.
The petroleum levy target for the current fiscal year was originally set at Rs. 1.468 trillion. However, collections are now expected to rise to nearly Rs. 1.546 trillion. For the next fiscal year, the IMF projects petroleum levy revenues could increase further to around Rs. 1.727 trillion.
The new estimates suggest that petrol and diesel prices may remain under pressure in the coming months if additional taxes or levies are imposed.
Tax Collection Targets Increased
The IMF report estimates Pakistan’s total tax collection target for the next fiscal year at approximately Rs. 15.264 trillion.
Expected revenue sources include:
- Direct taxes: Rs. 7.413 trillion
- Sales tax: Rs. 4.727 trillion
- Federal excise duty: Rs. 1.043 trillion
- Customs duties: Rs. 1.651 trillion
Gas surcharge collections are also likely to increase. Against the current year’s target of Rs. 90 billion, revenues may reach Rs. 134 billion and could rise to Rs. 151 billion next year.
Debt Payments Remain Major Challenge
The IMF estimates Pakistan’s total public expenditure for the upcoming fiscal year at around Rs. 26.423 trillion, while federal government spending may reach Rs. 16.592 trillion.
A major portion of expenditures is expected to go toward debt servicing. Interest payments alone could cost the government approximately Rs. 7.824 trillion.
Out of this amount:
- Domestic debt servicing: Rs. 6.652 trillion
- Foreign debt servicing: Rs. 1.107 trillion
Defence Budget Also Expected to Rise
The report also indicates a possible increase in defence spending next year.
The defence budget for the current fiscal year is expected to stay slightly below the original estimate at Rs. 2.564 trillion. However, for fiscal year 2026-27, defence spending could increase to nearly Rs. 2.665 trillion.
Growing Dependence on Fuel Taxes
The IMF projections highlight Pakistan’s continued dependence on taxation measures, especially petroleum levies, to stabilize the economy and fulfill programme commitments.
