IMF begins virtual budget talks with Pakistan after delaying visit

ISLAMABAD: The International Monetary Fund (IMF) began virtual talks with Pakistan on Wednesday to discuss the country’s federal budget for fiscal year 2025-26, after postponing its mission’s visit to Islamabad due to regional security concerns.

Originally scheduled for in-person meetings, the discussions are now being held online and will continue through May 16. The IMF delegation is still expected to arrive in Islamabad by the weekend, depending on how the security situation evolves. The Fund has said the delay will not disrupt the agenda or timeline for the budget review.

Talks will focus on key fiscal areas, including new tax measures and budget targets, as Pakistan works to finalise its budget ahead of its June 2 presentation — just before the Eidul Azha holidays. Finance Minister Muhammad Aurangzeb has said the budget is expected to be completed within the next three to four weeks. Negotiations with the IMF are expected to continue until May 23.

This will be Aurangzeb’s second budget since taking office. The upcoming fiscal plan is being developed in coordination with IMF as Pakistan looks to secure a new loan programme following conclusion of its previous bailout.

As part of the ongoing engagement, the IMF has appointed Iva Petrova, a Bulgarian economist, as the new mission chief to Pakistan. She will lead the talks alongside outgoing chief Nathan Porter. Petrova has previously overseen IMF missions to Armenia and contributed to policy work in Israel, Iceland and Latvia.

The Fund has set a primary budget surplus target of 1.6 per cent of GDP for the next fiscal year and expects Pakistan to generate about Rs14.3 trillion in tax revenue — roughly 11 per cent of the country’s GDP.

During the talks, the IMF will evaluate the credibility of these targets and examine the government’s reform plans to determine whether they are sufficient to meet the programme’s conditions.

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