ISLAMABAD, Feb 11: Pakistan is likely to request the International Monetary Fund to revise the revenue target down to Rs1.25 trillion in view of a Rs45 billion shortfall in revenue collection during the seven months of the current fiscal year.

Officials said the issue would be raised at the first review of the economic indicators of Pakistan scheduled to be held between Feb 14 and Feb 24 in Dubai.

The review will be followed by release of the second tranche of $750 million.

The finance ministry had increased the revenue target to Rs1.36 trillion from the budgeted Rs1.25 trillion under the ‘home-grown economic stabilisation programme’.

Pakistan had met most economic targets, like inflation control and reduction in fiscal deficit, officials said.

“We … are facing such a large shortfall owing to the drastic decline in imports’ value and volume,” a senior FBR official said.

He said that the FBR was still Rs14 billion short of even achieving the budgeted target.

“We are really concerned about achieving even the original target keeping in view the economic slowdown,” the official said.

The FBR collected Rs628.221 billion in the first seven months of the fiscal year against a target of Rs673 billion. The FBR will have to raise more than Rs621.8 billion in the next five months to achieve the revised target of Rs1.25 trillion.

That would mean a monthly collection of Rs124 billion, which “is almost impossible”, he said.

Figures show that the FBR collected Rs75 billion in January against a target of Rs93.5 billion, leaving a shortfall of Rs18.5 billion.

A source in the finance ministry said he expected it would be possible to persuade IMF officials to revise the target and that would not affect the release of the next tranche because Pakistan had fulfilled all other commitments relating to economic performance.

According to sources, the revenue collection declined mainly because of the decline of prices of fuel oil, edible oil and steel products in the intentional market. The slowdown in the telecom sector was also a major reason.

“No doubt tax authorities will try to make up for the shortfall in the coming months … but it will be unrealistic to expect them to achieve the target because of economic slowdown and a narrow tax base,” the official added.

The large-scale manufacturing sector, one of the main revenue contributors, also witnessed a negative growth of six per cent in the first six months of the current fiscal year.

Other sectors were also facing sluggish growth, such as wholesale and retail sectors. Agriculture and stock markets are exempt from taxes.

The decline in revenue compelled the government to cut development expenditure and take other measures to meet the budget deficit target of 4.2 per cent by the end of June.

The government also asked all government departments to cut non-salary expenditures by 20 per cent.

The sources said that instead of cutting the defence budget, the government might have to allocate more funds because of continuing tension on the eastern and western borders.

The country is also facing problems in receiving funds from the US for expenses incurred on the ‘war on terror’, which amounted to $1 billion.