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ISLAMABAD: An International Monetary Fund (IMF) mission led by Ms. Iva Petrova has concluded its staff visit to Islamabad after holding discussions with Pakistani authorities on the country’s economic outlook, fiscal reforms, and budget strategy for fiscal year 2026-27.
The IMF delegation remained in Pakistan from May 13 to May 20, 2026, focusing on recent economic developments, implementation of reform measures, and progress under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF).
In a statement issued at the conclusion of the visit, Ms. Petrova said discussions covered the impact of ongoing disruptions caused by the Middle East conflict, fiscal planning for FY2027, and structural reforms aimed at strengthening Pakistan’s economy.
“The authorities reaffirmed their commitment to a primary surplus target of 2 percent of GDP in FY2027, which will support fiscal sustainability and continue to build resilience,” the IMF statement said.
According to sources, the IMF has recommended an 18 percent increase in Pakistan’s petroleum levy target as part of broader revenue enhancement measures. The lender has also maintained its condition requiring electricity and gas tariffs to be adjusted twice annually under ongoing energy sector reforms.
The IMF said gradual fiscal consolidation would be supported through measures aimed at broadening the tax base, improving tax administration, enhancing public spending efficiency, and strengthening financial management at both federal and provincial levels. Discussions on the FY2027 budget are expected to continue in the coming days.
The State Bank of Pakistan (SBP) assured the IMF mission that it would maintain an appropriately tight monetary policy stance to anchor inflation expectations and monitor potential inflationary pressures arising from energy price increases.
The IMF also emphasized the importance of exchange rate flexibility, describing it as a key shock absorber for the economy, while calling for efforts to deepen Pakistan’s foreign exchange interbank market.
Sources said the Federal Board of Revenue (FBR) has been assigned a tax collection target of Rs15.264 trillion for the next fiscal year. Provinces have also been asked to generate an additional Rs430 billion in revenues and provide nearly Rs2 trillion in surplus funds to the federal government.
The discussions further covered reforms in the energy sector, state-owned enterprises, financial markets, and product market liberalisation aimed at attracting private investment and supporting long-term growth.
Under the Resilience and Sustainability Facility, both sides reviewed progress on climate-related reforms, including disaster risk financing, integrating climate priorities into budget planning, and power subsidy reforms.
The IMF thanked federal and provincial authorities for their “constructive engagement” and said the next mission, which is expected to include the Article IV consultation along with EFF and RSF reviews, is likely to take place in the second half of 2026.
Economic analysts believe Pakistan’s upcoming budget could include difficult fiscal measures, including higher energy prices, expanded taxation, and tighter expenditure controls as the government attempts to remain aligned with IMF reform conditions and secure external financing stability.
