The International Monetary Fund (IMF) has confirmed that talks on Pakistan’s FY2026 budget are still in progress. The announcement came after the IMF’s staff-level visit to Islamabad concluded on May 23.
Pakistan’s federal government has postponed the FY2025-26 budget presentation. Initially scheduled for June 2, the new date is now set for June 10. This delay signals ongoing struggles in finalizing fiscal targets with the IMF.
The Economic Survey for FY2025 will be unveiled on June 9, one day before the budget presentation. This survey outlines the performance of various sectors over the outgoing fiscal year.
IMF Team Reviews Economic Policies
The IMF team, led by Mission Chief Nathan Porter, arrived in Islamabad on May 19. The delegation assessed recent economic developments, progress under existing programmes, and the government’s proposed budget strategy.
Porter said the IMF held “constructive discussions” with Pakistani authorities. These discussions focused on the FY26 budget proposals, economic policy, and reforms under the 2024 Extended Fund Facility (EFF) and the 2025 Resilience and Sustainability Facility (RSF).
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Focus on Fiscal Discipline
The Pakistani government reaffirmed its commitment to fiscal discipline. Authorities aim to achieve a primary budget surplus of 1.6% of GDP in FY26. The IMF supports this target but has called for improved tax compliance and a broader tax base.
Spending priorities remain under discussion. However, both sides agree on protecting essential social services and development programmes.
Power Sector and Structural Reforms
The IMF and Pakistani officials also reviewed reforms in the power sector. These reforms aim to reduce high costs and improve financial performance. Structural changes to encourage investment and fair competition were also part of the dialogue.
Porter emphasized the importance of responsible economic management. He said Pakistan must continue to follow a strict, data-driven monetary policy. This approach is necessary to control inflation, which the State Bank of Pakistan aims to keep within the 5-7% range over the medium term.
Exchange Rate and Foreign Reserves
The IMF also stressed the need to rebuild foreign exchange reserves. It encouraged Pakistan to maintain a fully functioning forex market and allow more flexibility in the exchange rate. These measures are key to strengthening the country’s external financial position.
Future Plans and Cooperation
The IMF appreciated the cooperation shown by both federal and provincial authorities during the visit. The Fund confirmed that the next review mission under the EFF and RSF is scheduled for the second half of 2025.
As budget talks continue, all eyes are on how Pakistan balances fiscal responsibility with growth and social needs. The decisions made now will shape the country’s economic path in the coming year.
