Next mission expected in H2: IMF says FY26 budget agreement talks will continue

ISLAMABAD: The International Monetary Fund (IMF) has said it would continue discussions with Pakistan authorities towards agreeing over the budget for the fiscal year 2025-26.

The Fund also stated that the next mission associated with the next Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) reviews is expected in the second half of 2025.

An IMF mission led by Nathan Porter has concluded its staff visit to Islamabad which began on May 19, 2025.

IMF, govt to continue FY26 budget discussions ‘over the coming days’

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

At the end of the visit, Porter issued the following statement: We held constructive discussions with the authorities on their fiscal year 2026 budget proposals and broader economic policy, and reform agenda supported by the 2024 Extended Fund Facility (EFF) and the 2025 Resilience and Sustainability Facility (RSF).

He further stated that the authorities reaffirmed their commitment to fiscal consolidation while safeguarding social and priority expenditures, aiming for a primary surplus of 1.6 per cent of GDP in fiscal year 2026. Discussions focused on actions to enhance revenue—including bolstering compliance and expanding the tax base—and prioritize expenditure. We will continue discussions toward agreeing over the authorities’ fiscal year 2026 budget over the coming days.

Discussions 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.

The authorities also emphasised their commitment to ensuring sound macroeconomic policy making and building buffers.

In this context, maintaining an appropriately tight and data-dependent monetary policy remains a priority to ensure inflation is anchored within the central bank’s medium-term target range of 5–7 per cent. At the same time, rebuilding foreign exchange reserve buffers, preserving a fully functioning FX market, and allowing for greater exchange rate flexibility are critical to strengthening resilience to external shocks.

The IMF team will remain engaged and continue its close dialogue with the authorities. The next mission associated with the next EFF and RSF reviews is expected in the second half of 2025.

The Ministry of Finance has announced that the federal budget will be presented on June 10 instead of June 2.

Copyright Business Recorder, 2025