An International Monetary Fund (IMF) mission led by Nathan Porter has concluded a staff visit to Islamabad that began on May 19, hailing the “constructive” discussions with authorities ahead of the federal budget for fiscal year 2025-26.
In a statement issued after the visit, the IMF said it primarily focused on recent economic developments, program implementation, and the budget strategy for the upcoming fiscal year. “We held constructive discussions with the authorities on their FY2026 budget proposals and broader economic policy, and reform agenda supported by the 2024 Extended Fund Facility (EFF) and the 2025 Resilience and Sustainability Facility (RSF),” said Porter.
He noted authorities had reaffirmed their commitment to fiscal consolidation while safeguarding social and priority expenditures and targeting a primary surplus of 1.6% percent of GDP. “Discussions focused on actions to enhance revenue—including by bolstering compliance and expanding the tax base—and prioritize expenditure,” he said, adding the discussions were ongoing.
The talks, per Porter, also covered ongoing energy sector reforms targeting improved financial viability and reducing the high-cost structure of Pakistan’s power sector as well as other structural reforms aimed at fostering sustainable growth and promoting a more level-playing field for business and investment.
“The authorities also 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,” he said. The IMF official emphasized the need to rebuild foreign exchange reserve buffers, preserve a fully functioning FX market, and allow for greater exchange rate flexibility to strengthen 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,” he added.