Pakistan and the International Monetary Fund (IMF) will today conduct virtual discussions regarding Pakistan’s federal budget for 2025-26, seeking to address key economic challenges while agreeing on measures necessary for financial stability in the country. Discussions will center around several critical areas, including strategies to reduce circular debt in Pakistan’s gas sector – currently estimated at about Rs 2,800 billion – which stands at an estimated Rs 2.800 billion. Pakistani officials will present a five year plan to eliminate this debt through detailed performance data from gas sector companies in terms of profits/losses statements, cash flows and balance sheets. ARY NEWS Wiki Additionally, the IMF has stressed the significance of fiscal consolidation by pushing Pakistan towards reaching a primary budget surplus of 1.6% of GDP by FY 2026. The government reaffirmed its commitment to this target through improved tax compliance and broadening of tax bases; prioritizing essential expenditures; as well as prioritizing necessary expenditures (FT/Reuters/5; Express Tribune/3 and Business Standard/3). IMF Energy sector reforms are also high on the agenda, with discussions focused on increasing financial viability of Pakistan’s power sector and decreasing its high cost structure. The IMF has stressed the need for tight and data-dependent monetary policy in order to keep inflation within Pakistan’s medium-term target range of 5-7%, according to The Financial Express and Arab News. Virtual talks follow a series of in-person meetings which began on May 19 in Islamabad but failed to produce an agreement, according to IMF officials. Discussions will continue over the coming days in order to finalize a budget strategy plan. Financial Express +3 Express Tribune and Business Standard have provided updates. Pakistan needs the outcomes of these negotiations for its economic future as it aims to stabilize its economy and secure continued support from the IMF. The next formal review of Pakistan’s funding program by the IMF is scheduled for the second half of 2025, according to The Times of India, Financial Express, Reuters, Business Standard and other publications. As negotiations advance, both parties aim to reach an agreement that balances fiscal responsibility with economic growth and social welfare needs. Any decisions reached during these talks could have significant ramifications for Pakistan’s economic trajectory in the upcoming fiscal year.
