ISLAMABAD, May 24, 2025 — The International Monetary Fund (IMF) has concluded a critical staff visit to Pakistan, centered around the formulation of the upcoming FY2026 budget and evaluation of ongoing economic reforms.
Led by Nathan Porter, the IMF mission arrived in Islamabad on May 19 to engage in high-level discussions with federal and provincial authorities.
In an official statement, Porter described the talks as “constructive,” emphasizing a shared commitment between the IMF and Pakistan to advance the country’s fiscal and structural reform agenda. A key highlight of the discussions was the budget strategy for the fiscal year 2026, particularly under the frameworks of the 2024 Extended Fund Facility (EFF) and the 2025 Resilience and Sustainability Facility (RSF).
“We engaged in fruitful discussions with the authorities on their FY2026 budget plans and broader macroeconomic objectives. The goal remains fiscal consolidation while protecting social safety nets and critical development spending,” said Porter.
The IMF praised Pakistan’s commitment to achieving a budget primary surplus of 1.6 percent of GDP in FY2026. Emphasis was placed on enhancing revenue through expanding the tax base and improving compliance, while prioritizing spending efficiency across all tiers of government.
Beyond budget talks, the mission also addressed pressing structural challenges. Energy sector reforms, which are aimed at improving financial sustainability and reducing inefficiencies, were a key focus. The IMF team stressed the urgency of making Pakistan’s power sector viable and competitive to support long-term growth.
Monetary policy was another central theme. The authorities reiterated their commitment to maintaining a tight, data-driven policy stance to keep inflation within the central bank’s medium-term target of 5–7 percent. Additionally, measures to rebuild foreign exchange reserves and preserve the integrity of the FX market—by encouraging greater exchange rate flexibility—were discussed at length.
The IMF expressed appreciation for the hospitality and collaboration shown by Pakistan’s officials, reaffirming continued engagement. Negotiations on finalizing the FY26 budget are expected to continue in the days ahead, with the next mission review for the EFF and RSF set for the second half of 2025.
This IMF engagement underscores the global lender’s pivotal role in shaping Pakistan’s budget discipline and long-term economic resilience.