ISLAMABAD: Prime Minister Shehbaz Sharif said on Wednesday his government plans to reduce direct taxes in the upcoming federal budget to support the business community and spur economic growth, as Pakistan navigates reforms under its $7 billion International Monetary Fund (IMF) program.
Speaking at the Pakistan Governance Forum 2026 in Islamabad, a high-level policy dialogue convened to assess and advance governance and reform initiatives, Sharif maintained that indirect taxes collected from consumers must be properly deposited into the national exchequer.
“I feel that in this upcoming budget, God willing, in the next few months, we will need to reduce direct taxes across the board so that business investors get some relief and they know that their capital is not being eaten up by taxes,” he said.
The prime minister added that while his team was aligned on reducing direct taxes, the local business community must also avoid the misuse of indirect taxes.
“You collect indirect taxes from the consumer, but if you take that indirect tax from the consumer and put it in your pocket, then how is that any different from exploiting the larger public?” he said.
Pakistan is currently implementing fiscal consolidation measures under an IMF Extended Fund Facility which requires tax reforms for greater transparency and efficiency.
An IMF staff mission is also expected to hold meetings in Islamabad this week to conduct the third review under the bailout program and a second review under a climate resilience facility. The outcome will determine continued disbursements and is seen as critical to maintaining investor confidence.
Sharif acknowledged that Pakistan was operating under IMF conditionalities but said many of the reforms demanded by the lender were necessary to strengthen the country’s economic foundations.
He highlighted improvements in macroeconomic indicators in recent years while calling for all provinces to actively participate in the government’s “Uraan Pakistan” initiative, a federal development framework aimed at accelerating economic growth, boosting exports, and improving governance.
