IMF says talks on Pakistan’s FY26 budget to continue

May 24, 2025 (MLN): The International Monetary Fund (IMF) has stated that discussions on Pakistan’s fiscal year 2026 (FY26) budget will continue over the coming days, following the conclusion of a staff-level visit to Islamabad.

Led by Nathan Porter, the IMF mission wrapped up its visit, which began on May 19, 2025, focusing on recent economic developments, progress in Pakistan’s IMF-supported programs, and the upcoming FY26 budget strategy.

Porter described the discussions as constructive, highlighting the authorities’ commitment to achieving a primary surplus of 1.6% of GDP in FY2026 while protecting essential social and priority expenditures.

The talks also addressed plans to boost revenue through enhanced compliance and expanding the tax base, alongside efforts to prioritize government spending, as per the press release issued.

The mission further reviewed ongoing energy sector reforms aimed at improving financial viability and reducing the high-cost structure of Pakistan’s power sector.

Additional structural reforms designed to foster sustainable growth and create a more level playing field for business and investment were also part of the dialogue.

Authorities reaffirmed their dedication to sound macroeconomic policies, emphasizing the need to maintain a tight, data-driven monetary policy to keep inflation within the central bank’s medium-term target range of 5–7%.

They also stressed the importance of rebuilding foreign exchange reserves, maintaining a fully functioning foreign exchange market, and allowing greater exchange rate flexibility to strengthen resilience against external shocks.

Porter thanked the federal and provincial authorities for their hospitality and collaborative engagement throughout the visit.

The IMF team will maintain close communication with Pakistani officials as it prepares for the next review mission, expected in the second half of 2025, under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programs.

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