Pakistan, IMF kick off talks as govt hands budget-making process to Dar

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have begun budget talks for fiscal year 2026–27, with the government handing the budget formulation process to Deputy Prime Minister Ishaq Dar after initial work was found below par, officials said.

Prime Minister Shehbaz Sharif has constituted a high-level committee headed by Dar to review and refine tax policy proposals prepared by the Tax Policy Office, which operates under the Finance Division.

The committee includes Finance Minister Muhammad Aurangzeb, Planning Minister Ahsan Iqbal, Minister for Economic Affairs Ahad Khan Cheema and other senior officials.

The committee has been tasked with reviewing proposals and submitting workable recommendations for the upcoming budget.

A separate enforcement committee, headed by Cheema, has also been formed to oversee measures aimed at improving tax compliance and revenue collection.

In its first meeting, the committee directed the Federal Board of Revenue (FBR) to introduce modern digital systems, including artificial intelligence-based tools, to identify tax evasion, under-reporting and fake tax returns.

The government is targeting around Rs15.3 trillion in tax revenue for the next fiscal year, officials said.

Sources said that the authorities are considering introducing new taxes worth around Rs215 billion, while also offering relief in selected sectors. Under its agreement with the IMF, Pakistan is required to implement fiscal measures worth about Rs430 billion, including Rs215 billion in new taxes and Rs215 billion through improved enforcement and compliance, according to a report in The Express Tribune.

An IMF review mission, led by Mission Chief Iva Petrova, is currently in Pakistan and is expected to stay until May 20, officials said.

During the initial meeting with Finance Minister Aurangzeb and the economic team, discussions focused on budget preparations, macroeconomic stability, fiscal reforms and energy and privatisation agendas. The State Bank governor and senior FBR officials also attended the first session.

During the meeting, the IMF delegation emphasised the importance of maintaining reform momentum, fiscal discipline and structural adjustments to support long-term economic stability and growth, according to the Finance Ministry.

Officials said the budget is expected to be presented in parliament after the Eidul Azha holidays, once final approvals are aligned with IMF requirements and domestic consultations are completed.