ISLAMABAD – The International Monetary Fund (IMF) has confirmed that talks with Pakistan regarding the upcoming fiscal year’s budget will continue in the coming days, following the conclusion of a recent mission to Islamabad.
High-level discussions between the two sides began on May 19 but ended without final agreement, prompting the government to delay the federal budget announcement until June 10.
Focus on Fiscal Reforms
Nathan Porter, IMF mission chief for Pakistan, described the recent talks as “constructive” and stated that further negotiations will aim to finalize budget plans for fiscal year 2025–26.
Discussions emphasized expanding the tax base, improving compliance, and focusing government spending more efficiently.
Porter also mentioned that the IMF’s ongoing financial support under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) will guide these reforms.
Key Economic Goals
According to the IMF, Pakistan is targeting a primary budget surplus of 1.6% of GDP in FY2026.
The authorities have pledged to continue fiscal consolidation while protecting essential and social sector spending.
In addition to budget matters, the mission reviewed Pakistan’s monetary policy.
Maintaining a strict and data-driven approach is considered necessary to keep inflation within the central bank’s medium-term target of 5–7%.
Energy and Structural Reforms
The IMF noted progress in reforming Pakistan’s energy sector, aimed at improving financial sustainability and reducing high costs. Broader structural reforms are also being pursued to enhance long-term growth and encourage investment.
Strengthening foreign reserves and allowing a more flexible exchange rate remain core IMF recommendations to protect Pakistan from external economic shocks.
Political and Provincial Dimensions
Meanwhile, imprisoned PTI leader Imran Khan has requested a meeting with Finance Minister Muhammad Aurangzeb to advise on the upcoming budget, emphasizing his party’s role in governing Khyber Pakhtunkhwa.
Former Prime Minister Imran Khan’s conversation with lawyers in Adiala Jail – May 22, 2025
The baseless trials related to the events of May 9th (2023) have resumed once again. May 9th was a false flag operation. No CCTV footage has been presented to this day, and the past two…
— Imran Khan (@ImranKhanPTI) May 24, 2025
Khan also urged the federal government to ensure the National Finance Commission meets promptly and to transfer constitutionally allocated funds to the provinces.
Defence and Development Spending
Sources indicated that defence allocations remain a sticking point in talks with the IMF.
Budget planning continues virtually, including discussions on the federal development programme, which may total Rs1 trillion.
The government reportedly ruled out an immediate increase in petroleum levies but may introduce a carbon levy starting at Rs3 per litre to meet sustainability targets under the RSF.
Relief for salaried individuals, the real estate sector, and other expenditure controls were also presented to the IMF, but these depend on Pakistan identifying alternate revenue streams.
What’s Next
Pakistan’s budget will be followed by a detailed parliamentary debate, allowing finance committees to examine and refine the proposals before final approval by June 30.
