Pakistan and the International Monetary Fund (IMF) kicked off virtual discussions to chart the fiscal course for 2025-26, with a focus on budget planning, revenue targets, and structural reforms. The online talks will run until May 16, after which an IMF mission is expected to visit Islamabad for in-person policy-level negotiations until May 23.
These talks are part of Pakistan’s commitments under the Extended Fund Facility (EFF), as the government works to finalise the federal budget before the July 1 start of the new fiscal year. Finance Minister Muhammad Aurangzeb has said that discussions will centre on setting a realistic fiscal path, expanding the tax base, and implementing long-overdue reforms.
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Key proposals under review include a federal budget volume of around Rs 18,000 billion, a 15–18% increase in defence spending, and Rs 921 billion for development projects. The government is also eyeing an ambitious tax target of over Rs 14,000 billion for the Federal Board of Revenue—roughly 11% of GDP. Meanwhile, it aims to limit the fiscal deficit to 5.1% of GDP and achieve a primary surplus of 1.6%.
The IMF will be briefed on reforms covering privatisation, government restructuring, tax compliance, and energy sector improvements. The government also aims to boost non-tax revenues, especially through the petroleum levy, and strengthen efforts to document the informal economy.
The IMF team’s arrival in Islamabad was reportedly delayed due to security concerns, but both sides remain committed to advancing the dialogue. The upcoming policy-level talks are expected to determine the shape of Pakistan’s economic roadmap for the year ahead.
