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–Govt moves to tighten spending, improve transparency
Aftab Maken
ISLAMABAD: The Finance Ministry has decided to introduce major budgetary reforms under conditions set by the International Monetary Fund, aiming to strengthen fiscal discipline and improve transparency in public finances.
Officials at the Ministry of Finance said work is underway on budget proposals for fiscal year 2026–27, with new rules barring the release of supplementary grants without prior parliamentary approval. The move is intended to curb unplanned expenditures that have historically widened the fiscal deficit.
The government has operationalized a dedicated Tax Policy Office within the finance ministry to streamline tax planning and reduce frequent mid-year budget changes. Authorities say the office will help ensure consistency in fiscal policy and improve revenue forecasting.
Islamabad has also assured the IMF that coordination between government spending and budget allocations will be strengthened. The reforms are part of broader commitments under Pakistan’s ongoing IMF programme, which prioritizes deficit reduction and revenue enhancement.
An emergency fund will again be included in the upcoming budget to address unforeseen expenditures. In the current fiscal year, Rs300 billion was allocated for contingency spending, though officials indicated that stricter oversight mechanisms will govern its use going forward.
Pakistan’s fiscal framework has long faced challenges due to repeated reliance on supplementary grants and ad hoc adjustments. According to estimates by the State Bank of Pakistan, the country’s budget deficit has hovered between 6% and 7% of GDP in recent years, reflecting structural imbalances in revenue and expenditure.
Finance ministry officials said relevant departments have been assigned responsibility for implementing the reforms, with new rules being drafted to ensure tighter expenditure controls. The updated strategy also focuses on restoring investor confidence and strengthening engagement with international financial institutions.
Authorities acknowledged that geopolitical tensions in the Middle East during the current fiscal year forced cuts in the development budget. For the upcoming year, the government aims to shield development projects from mid-year reductions to maintain continuity in infrastructure and public investment.
An IMF delegation is expected to visit Pakistan soon to review progress on budget preparations and reform measures. The government has pledged to reduce delays in fiscal decision-making and improve execution of approved budgets.
Economists say successful implementation of these reforms could enhance Pakistan’s fiscal credibility and support external financing prospects. However, they caution that sustained policy discipline will be critical, particularly within the framework of the International Monetary Fund programme.
