Experts call for curbing illicit trade

Business Recorder reported that IMF talks on revenue goals and fiscal discipline for FY2026-27 have drawn fresh attention to illicit trade, which sources see as a near-term route to recover income. The IMF has pressed Pakistan to widen its tax base and to run a primary surplus of 2 per cent of GDP, a goal set for 2027. The Federal Board of Revenue targets Rs 778 billion in enforcement-linked receipts next year, relying on enforcement rather than new taxes.

Sources estimate Rs1,000 billion is lost each year to illicit activity in tobacco, petroleum, pharmaceuticals, tea and auto parts, a direct obstacle to IMF targets. Tobacco shows the scale, as illicit cigarettes make up more than 53 per cent of the national cigarette market and deprive the treasury of around Rs300 billion annually. Enforcement drives yielded over Rs50 billion from the sector last fiscal year, yet unlawful products still dominate, pointing to gaps that raids alone cannot fix.

Osama Siddiqui, a macroeconomics analyst, said enforcement-led recovery is practical, but it needs clear, consistent data to carry weight in IMF talks. He added that closing the gap needs coordinated federal and provincial action, including monitoring at Green Leaf Threshing units, tighter advance withholding tax enforcement and ongoing provincial campaigns against unstamped cigarettes.