IMF to continue budget talks with Pakistan as staff visit concludes

ISLAMABAD: The International Monetary Fund (IMF) said it would continue budget talks with Pakistan as its mission, led by Nathan Porter, has concluded its staff visit to Islamabad.

The staff visit focused on recent economic developments, program implementation, and the budget strategy for fiscal year (FY) 2026.

At the end of the visit, Porter said in a statement, “We held constructive discussions with the authorities on their FY2026 budget proposals, as well as the broader economic policy and reform agenda supported by the 2024 Extended Fund Facility (EFF) and the 2025 Resilience and Sustainability Facility (RSF)”.

He stated that the authorities reaffirmed their commitment to fiscal consolidation while safeguarding social and priority spending, aiming for a primary surplus of 1.6 percent of GDP in FY2026.

He added that discussions focused on actions to enhance revenue—including by bolstering compliance and expanding the tax base—and prioritize expenditure. “We will continue discussions towards agreeing over the authorities’ FY26 budget over the coming days”, the statement noted.

The talks also covered ongoing energy sector reforms aimed at improving financial viability and reducing the high-cost structure of Pakistan’s power sector as well as other structural reforms which will help foster sustainable growth and promote a more level playing field for business and investment.

Pakistani authorities reiterated their commitment to sound macroeconomic policymaking and building financial buffers. Key priorities include maintaining a tight, data-driven monetary policy to anchor inflation within the central bank’s medium-term target of 5–7 percent.

Additionally, rebuilding foreign exchange reserves, ensuring a functioning FX market, and increasing exchange rate flexibility are seen as critical to enhancing resilience against external shocks.

The IMF mission expressed appreciation for the hospitality and strong collaboration from both federal and provincial authorities.

The IMF team will continue its close engagement with Pakistani officials. The next mission associated with the next EFF and RSF reviews is expected in the second half of 2025, the statement added.

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