Pakistan and IMF Continue Budget Talks; Mission Extends Stay
The International Monetary Fund (IMF) mission has concluded its visit to Islamabad, holding what it termed “constructive discussions” with Pakistani authorities on the upcoming federal budget for the fiscal year 2027 and the country’s ongoing reform agenda.
The mission, led by Iva Petrova and present from May 13 to May 20, focused on recent economic developments, reform implementation, and budget strategy. According to an IMF statement, Pakistani authorities reaffirmed their commitment to achieving a primary surplus target of two per cent of Gross Domestic Product (GDP) in FY2027 to support fiscal sustainability.
This fiscal consolidation is expected to be supported by broadening the tax base, improving tax administration, and enhancing spending efficiency at both federal and provincial levels. While discussions on the final budget will continue, earlier talks indicated key IMF recommendations including a significant tax collection target, an increased petroleum levy, and biannual hikes in electricity and gas tariffs to manage circular debt.
The State Bank of Pakistan (SBP) has also reiterated its commitment to maintaining a tight monetary policy to anchor inflation expectations, and will closely monitor potential secondary effects from energy price increases. The IMF stressed that exchange rate flexibility should continue to serve as a key shock absorber, alongside efforts to deepen the foreign exchange interbank market.
Talks also covered structural reforms in the energy sector and state-owned enterprises, product market liberalization, and financial sector reforms aimed at fostering durable growth and attracting private investment. The IMF mission is now expected to return in the second half of 2026 for the Article IV consultation and reviews of the ongoing programs.
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Updated: 2:58 AM PKT — May 21, 2026
Discussions are now reportedly focused on six outstanding points between the two sides. The Fund’s recommendation for biannual utility price increases is aimed at managing the country’s circular debt.
Updated: 2:39 AM PKT — May 21, 2026
Sources report that the IMF has proposed new tax measures worth Rs 430 billion and biannual hikes for electricity and gas tariffs. Separately, a tentative agreement has been reached to increase the stipend for the Benazir Income Support Programme.
Updated: 1:49 AM PKT — May 21, 2026
The International Monetary Fund has proposed a specific tax collection target of Rs. 15,274 billion for the upcoming fiscal year. This clarifies an earlier recommendation which had only specified a target exceeding Rs. 15 trillion.
Updated: 12:09 AM PKT — May 21, 2026
In parallel to IMF talks, the government has engaged its coalition partners for budget consultations. An MQM delegation met with the Prime Minister to present its proposals, while initial discussions have also occurred between the PML-N and PPP. The Fund has also reportedly demanded higher revenue generation from the provinces.
Updated: 11:54 PM PKT — May 20, 2026
Sources indicate that an agreement has been reached on several key points, with negotiations continuing on six outstanding issues. The Fund has also recommended a tax collection target exceeding PKR 15 trillion for the upcoming fiscal year.
Updated: 11:19 PM PKT — May 20, 2026
The ongoing talks are part of negotiations for a new bailout package. As part of these discussions, the Fund has also advised the government to revise electricity and gas prices twice a year.
