IMF wraps up Pakistan visit following talks with authorities on reforms, budget

Lead

An International Monetary Fund (IMF) mission has concluded its visit to Pakistan after holding talks with authorities on economic developments, fiscal plans for the next financial year, and progress on reforms under the country’s IMF-supported programmes. The visit, which took place in Islamabad from May 13 to May 20, focused on “recent economic developments, reform implementation, and the budget strategy for fiscal year 2027,” according to a statement issued by the IMF. The mission was led by Iva Petrova, who said that “constructive discussions” were held on a range of issues, including disruptions from the Middle East conflict, the upcoming budget formulation, and progress under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).

Coverage Comparison

The IMF’s visit and the broader reform programme have been covered by multiple sources, each providing different details and perspectives.

Dawn reported that the IMF mission concluded its talks, quoting Petrova as saying that the authorities reaffirmed their commitment to a primary surplus target of 2% of GDP in FY2027. The same report noted that the State Bank of Pakistan reiterated its commitment to maintaining an appropriately tight monetary policy stance to anchor inflation expectations, and that exchange rate flexibility should continue to serve as a key shock absorber.

Another Dawn report focused on the finance minister’s meeting with the IMF delegation. Finance Minister Muhammad Aurangzeb discussed preparations for the upcoming federal budget and the country’s broader reform agenda. The finance ministry said that the discussions covered macroeconomic stabilisation efforts, reform priorities, and the goal of fostering sustainable economic growth. Aurangzeb also shared encouraging developments regarding the external sector, highlighting positive trends in remittances and export performance.

A third Dawn report highlighted the IMF’s enhanced focus on fighting corruption. According to this report, Pakistan has been required to increase the autonomy and transparency of the National Accountability Bureau (NAB) and report regularly to the Fund on the outcomes. The IMF’s staff report stated that the authorities will submit amendments to the NAB Ordinance to parliament to enhance the appointment process for the NAB chairman and publish investigation and prosecution rules and annual enforcement statistics by the end of January 2027.

The Hindu — World carried a report on an IMF staff mission in Pakistan to finalise budget proposals before the budget for 2026-27 is presented to the cabinet and parliament early next month. The report cited a Dawn newspaper article that detailed defence expenditure projections, total federal revenue estimates, and commitments related to anti-corruption measures. It said Pakistan is expected to raise its defence budget by about PKR 100 billion in the upcoming fiscal year, with defence expenditure for 2026-27 estimated at PKR 2.665 trillion, up from PKR 2.564 trillion this year. The IMF projected Pakistan’s total federal revenues for 2026-27 at PKR 17.144 trillion, representing a 13.5% increase over the current fiscal year.

Key Claims

• The IMF mission visited Islamabad from May 13 to May 20, focusing on recent economic developments, reform implementation, and the budget strategy for fiscal year 2027, as stated by the IMF.
• The authorities reaffirmed their commitment to a primary surplus target of 2% of GDP in FY2027, which will support fiscal sustainability, according to Iva Petrova.
• The government will identify the 10 top corruption-prone institutions by the end of this year for detailed analysis and audit, and provincial anti-corruption agencies are expected to be strengthened, as reported by Dawn and The Hindu.
• Pakistan has been required to increase the autonomy and transparency of the National Accountability Bureau (NAB) and report regularly on the outcomes to the IMF, with amendments to the NAB Ordinance to be tabled by January 2027.
• The IMF approved a new disbursement for Pakistan of about $1.3 billion, as reported by Dawn.
• Pakistan is expected to raise its defence budget by about PKR 100 billion in the upcoming fiscal year, with defence expenditure estimated at PKR 2.665 trillion for 2026-27, as reported by The Hindu citing a Dawn article.
• The IMF projected Pakistan’s total federal revenues for 2026-27 at PKR 17.144 trillion, according to The Hindu.
• The government is considering reducing the income tax burden on salaried individuals while refraining from increasing salaries and pensions in the upcoming budget, as reported by Dawn.

Perspectives

Government of Pakistan: The finance ministry, through Finance Minister Muhammad Aurangzeb, expressed appreciation for the IMF’s continued engagement and highlighted positive trends in remittances and export performance. The government emphasised its commitment to macroeconomic stability and structural reforms to promote investment and export-led growth.

Pakistan Tehreek-e-Insaf (PTI): PTI Central Information Secretary Sheikh Waqas Akram alleged that the government is set to present its fifth budget without reforms, claiming that no serious effort had been made to cut the cost of governance or address structural inefficiencies. He said the public had been repeatedly asked to accept eroded incomes and diminished purchasing power in the name of stability, while the country had received anaemic growth and capital flight.

International Monetary Fund (IMF): The IMF mission stressed the importance of maintaining a tight monetary policy stance to anchor inflation expectations and emphasised the need for exchange rate flexibility. The Fund also required Pakistan to enhance the autonomy and transparency of the NAB and to strengthen provincial anti-corruption bodies as part of its enhanced focus on fighting corruption.