Concluding Pakistan visit, IMF says talks on budget constructive

ISLAMABAD  –  An International Monetary Fund (IMF) mission led by Mr Nathan Porter has concluded its staff vis­it to Is-lamabad which began on May 19, 2025, the Fund said in press release issued on Saturday.

The staff visit focused on re­cent economic developments, program implementation, and the budget strate-gy for fiscal year (FY) 2026. At the end of the visit, Mr Porter issued the fol­lowing statement:

“We held constructive discus­sions with the authorities on their FY2026 budget proposals and broader eco-nomic policy, and reform agenda supported by the 2024 Extended Fund Facility (EFF) and the 2025 Resili-ence and Sustainability Facility (RSF). The authorities reaffirmed their commitment to fiscal consolida­tion while safeguarding social and priority expenditures, aim­ing for a primary surplus of 1.6 percent of GDP in FY2026.”

“Discussions focused on ac­tions to enhance revenue—in­cluding by bolstering compliance and expanding the tax base—and prioritize expenditure. We will continue discussions towards agreeing over the authori-ties’ FY26 budget over the coming days,” says the press release. “Discussions also covered ongo­ing ener-gy 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 re-mains a priority to ensure inflation is anchored within the central bank’s medium-term tar­get range of 5–7 percent. 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 mis­sion thanks the federal and provincial authori­ties for their hospitality, constructive discussions, and strong collabora­tion and commitment to sound policies. 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.