Pakistan, IMF discuss upcoming federal budget

Preparations for the upcoming federal budget for fiscal year 2025-26 are underway, with the government reviewing key fiscal plans in coordination with the International Monetary Fund (IMF).

Finance Minister Muhammad Aurangzeb, today briefed the visiting IMF Mission on Pakistan’s macroeconomic outlook, fiscal strategy, reform priorities, and the government’s ongoing efforts to ensure sustainable economic stability and long-term growth, read a statement on Wednesday.

“The discussions focused on Pakistan’s macroeconomic stabilisation efforts, preparations for the upcoming federal budget, and the broader reform agenda aimed at strengthening fiscal and external sustainability while fostering sustainable economic growth.

“Both sides exchanged views on maintaining reform momentum, preserving macroeconomic stability, and advancing structural reforms to promote investment, productivity, and export-led growth within a balanced and forward-looking policy framework.”

Welcoming the IMF delegation to Islamabad, the Aurangzeb appreciated the Fund’s continued engagement and constructive dialogue with the Government of Pakistan.

Aurangzeb shared encouraging developments regarding Pakistan’s external sector, highlighting positive trends in remittances and export performance.

He noted that recent data indicated improvement in exports on both month-on-month and year-on-year basis, reflecting growing resilience in the economy and a gradual strengthening of macroeconomic fundamentals.

The finance minister emphasised that while economic stabilisation efforts had produced encouraging results, the government remained fully mindful of the structural challenges confronting the economy, particularly external liabilities and the need to accelerate sustainable, export-led growth.

He reiterated the government’s commitment to deepening reforms aimed at strengthening macroeconomic stability without compromising long-term growth prospects.

In this regard, he underscored the importance of moving Pakistan away from recurring boom-and-bust cycles through structural reforms, productivity enhancement, deregulation, and improved export competitiveness.

Aurangzeb further stated that the government’s reform agenda had been carefully calibrated in consultation with international experts and economists. He emphasised that the ongoing policy measures were not driven by short-term considerations, but formed part of a broader and technically grounded economic transformation strategy endorsed at the highest level.

He also briefed the Mission on Pakistan’s continued engagement with international development partners, including ongoing economic cooperation initiatives with China and efforts aimed at mobilising long-term investment aligned with the country’s strategic economic priorities.

The visiting IMF Mission, led by Mission Chief Iva Petrova, acknowledged the positive progress made by Pakistan in maintaining macroeconomic stability despite a challenging global and regional environment.

The Mission appreciated the government’s continued commitment to prudent economic management and reform implementation.

The IMF team emphasised the importance of sustaining reform momentum, maintaining fiscal discipline, and advancing structural reforms to support durable and inclusive economic growth. Discussions during the meeting also focused on the broader macroeconomic framework, the Government’s reform agenda, and priorities for the upcoming budget.

The Mission reaffirmed its commitment to continued engagement and constructive cooperation with the government in support of the country’s economic reform programme and long-term economic resilience.

The meeting was attended by Governor State Bank of Pakistan Jameel Ahmad, Secretary Finance Division Imdad Ullah Bosal, Chairman Federal Board of Revenue Rashid Mahmood Langrial, and senior officials of the Finance and Revenue Division, as well as the Tax Policy Office.

Earlier in the day, the SBP announced it had received about $1.3 billion from the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).

“The amount would be reflected in SBP’s foreign exchange reserves for the week ending on May 15, 2026,” the SBP said.

Pakistan’s 37-month EFF arrangement was approved on September 25, 2024, and aims to build resilience and enable sustainable growth.

Meanwhile, sources earlier told Business Recorder that the government is unlikely to introduce any new taxes in the upcoming budget, as it plans to achieve next year’s revenue target through enforcement and administrative measures estimated at Rs778-780 billion.

Sources said that the federal budget for the next fiscal year is expected to provide relief to taxpayers, with the authorities relying on alternative revenue-generation measures to offset potential revenue losses.