Mahir Binici, the IMF Resident Chief in Pakistan, pointed out that the retail sector, despite representing 19% of the GDP, contributes a mere 1% to tax revenues.

In response to these revenue challenges, the government plans to implement stricter measures against informal sectors that do not contribute to the national exchequer.

Federal Finance Minister Muhammad Aurangzeb has stressed the importance of increasing tax contributions from the agriculture, retail, and real estate sectors to ensure economic stability.

In September 2024, the Pakistan government, under Prime Minister Shehbaz Sharif, secured IMF approval for a new loan program that included a significant $1.02 billion disbursement.

A review mission from the IMF is set to visit Pakistan in early March 2025 to evaluate the country's compliance with the $7 billion Extended Fund Facility (EFF).

This first review is particularly critical as the government may require waivers for unmet conditions related to the loan.

Compounding the challenges, the upcoming IMF review will coincide with a troubling shift in the country's current account, which has transitioned from a surplus to a deficit, reporting a $420 million deficit in January 2025.

Officials have noted that the formal sector, which includes salaried and manufacturing sectors, is currently bearing a disproportionate tax burden.

The IMF has attributed Pakistan's significant debt burden to the government's failure to generate adequate revenue, particularly from key sectors.