ISLAMABAD: Pakistan is set to begin critical budget discussions with the International Monetary Fund as an IMF delegation is expected to arrive in the country for negotiations on the federal budget for fiscal year 2026-27, sources said on Tuesday.
According to officials familiar with the process, formal talks between Pakistani authorities and the IMF are likely to start tomorrow and continue for nearly 10 days.
The discussions will focus on revenue targets, government spending plans, fiscal reforms, and broader economic projections tied to Pakistan’s ongoing IMF programme.
Sources said the negotiations will play a decisive role in shaping key budgetary goals for the upcoming fiscal year, including commitments related to fiscal discipline and economic stabilisation.
Officials added that no formal discussions have yet taken place regarding the possible transfer of the Benazir Income Support Programme (BISP) to provincial governments, despite reports suggesting potential decentralisation plans.
Economic policymakers are also expected to brief the IMF team on growing risks to Pakistan’s economy arising from escalating tensions in the Middle East and regional instability.
According to sources, rising geopolitical uncertainty could trigger fresh inflationary pressures, especially if international oil prices continue to climb. Projections shared during preliminary consultations suggest crude oil prices may range between $82 and $125 per barrel depending on the regional security situation.
To manage possible fiscal pressures, the government may consider increasing petroleum levies or imposing additional taxes on fuel products, officials said.
Authorities are also concerned that prolonged unrest in the Gulf region could hurt Pakistan’s external sector by reducing remittance inflows and limiting employment opportunities for Pakistani workers in Gulf countries.
Sources further stated that Pakistan plans to maintain a primary budget surplus of 1.3% of GDP during the first year of the fiscal framework, with expectations of improving it to 1.6% in the following year.
Meanwhile, the current account deficit is projected to remain at 0.4% of GDP during the current fiscal year before slightly widening to 0.9% next year.
Officials also defended the State Bank of Pakistan’s tight monetary policy, saying it helped curb inflation and contributed to macroeconomic stability, while emphasizing that the country’s foreign exchange reserves were strengthened through broader economic improvements rather than external borrowing alone.
