An International Monetary Fund (IMF) team has concluded its visit to Pakistan after discussions with authorities regarding the upcoming budget, broader economic policy and reforms under its ongoing $7 billion loan program, the lender said on Saturday.
The visit concluded hours after the Pakistani government announced it would now present the Budget 2025-26 on June 10, a delay from the earlier announced date of June 2, seen by many as a result of authorities’ struggle to finalize fiscal targets.
The Economic Survey 2024-25, which details performance of various sectors of the economy in the outgoing fiscal year, will be unveiled on June 9, a day before the budget presentation, according to the Pakistani finance ministry.
The discussions between Islamabad and the IMF team, led by Mission Chief Nathan Porter, began on May 19 and focused on recent economic developments, IMF program implementation, and the budget strategy for the next fiscal year.
“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,” Porter was quoted as saying by the IMF.
“Discussions focused on actions to enhance revenue – including by bolstering compliance and expanding the tax base – and prioritize expenditure. We will continue discussions toward agreeing over the authorities’ FY26 budget over the coming days.”
The IMF this month approved first review of Pakistan’s loan program, unlocking a $1 billion payment. A fresh $1.4 billion loan was also approved under the IMF’s climate resilience fund.
The IMF loan is vital for Pakistan which is trying to revive its debt-ridden economy that is expected to expand 2.68 percent by June, about one percent lower than the government’s earlier projection.
The IMF’s latest country report, issued last week, mentioned certain structural benchmarks for Pakistan’s economic reform program that officials said represented the natural progression of the measures already agreed upon, when Pakistan signed the Memorandum for Economic and Financial Policies (MEFP) in September.
“These benchmarks are not surprises. They are deliberate follow-ons to earlier milestones,” Khurram Schehzad, an adviser to Pakistan’s finance minister, told Arab News this week, citing Pakistan’s parliamentary approval of the next budget in line with the IMF staff agreement as a second step toward the country’s goal of achieving a primary surplus of 2 percent of GDP by FY27.
“The first step was the FY25 budget [presented in June last year], which targeted a 1.0 percent surplus.”
Discussions between Pakistan and the visiting IMF team 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,” according to the lender.
Pakistani authorities emphasized 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 percent,” the lender said.
“At the same time, rebuilding foreign exchange reserve buffers, preserving a fully functioning FX [foreign exchange] market, and allowing for greater exchange rate flexibility are critical to strengthening resilience to external shocks.”
The next IMF mission is expected to visit Pakistan in the second half of 2025 for next reviews its loan program and climate fund facility.