ISLAMABAD – May 25, 2025: The International Monetary Fund (IMF) ended its 10-day visit to Pakistan without reaching a final agreement, saying that discussions on the fiscal year 2026 budget will continue in the coming days. In a statement, outgoing IMF Mission Chief Nathan Porter said both sides are still working to agree on key areas, including revenue targets and spending priorities.
The IMF team began virtual talks on May 13 and held face-to-face meetings in Islamabad from May 19. However, due to ongoing India-Pakistan tensions, the initial discussions took place remotely from Türkiye. Talks focused on increasing tax revenue, broadening the tax base, and maintaining essential social spending while aiming for a primary budget surplus of 1.6% of GDP.
Despite some progress, significant gaps remain. The IMF has asked Pakistan to come up with alternative ways to give tax relief to the salaried class, including taxing high-end pensioners—a proposal the government finds politically sensitive. Prime Minister Shehbaz Sharif had earlier rejected the Federal Board of Revenue’s (FBR) proposed relief for salaried workers as too low and demanded more support for this overburdened segment.
In contrast, the IMF criticized Pakistan’s continued support for the real estate sector, particularly plans to reduce transaction taxes, which go against IMF policy. Discussions also covered energy sector reforms, where the IMF approved Rs1.04 trillion in subsidies, slightly below what the Power Division had requested.
Meanwhile, the government has delayed the federal budget announcement from June 2 to June 10 to allow more time for negotiations. The IMF stressed that maintaining tight monetary policy and increasing foreign exchange reserves remain top priorities. Porter confirmed the IMF team will remain in close contact and return for the next review under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) later this year.