ISLAMABAD: The International Monetary Fund (IMF) has shared the Memorandum of Economic and Financial Policies (MEFP) with Pakistan authorities after finalizing key outlines of the 2026–27 budget, while urging more frequent adjustments to oil prices to reflect global market fluctuations.
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Pakistan and the IMF have exchanged drafts of the MEFP to reach a staff-level agreement for the third review and the release of the fourth tranche under the $7 billion Extended Fund Facility (EFF) and $1.4 billion under the Resilience and Sustainability Facility (RSF). The IMF has sought a clear budgetary and fiscal framework for the 2026-27 budget, including the Federal Board of Revenue’s (FBR) tax collection target of Rs15.08 trillion. For the current fiscal year, the FBR target has been revised downward to Rs13.4 trillion from an earlier projection of Rs13.79 trillion.
The IMF has specifically recommended faster readjustments of petroleum, oil, and lubricant (POL) prices. Pakistan recently moved to weekly price reviews from a fortnightly schedule, but the Fund seeks even quicker updates, though it is yet unclear whether this would be twice weekly or daily. Pakistani officials are negotiating the appropriate timeframe for these adjustments.
Meanwhile, the Pakistan Institute of Development Economics (PIDE) warned in a new policy study that the ongoing Middle East conflict has become a global economic shock, posing risks to Pakistan’s trade, energy security, and external stability. The report estimates that exports to GCC countries could fall by $1.5–$2 billion if disruptions in the Strait of Hormuz continue, while rising oil prices could increase Pakistan’s import bill by $4.5 billion.
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PIDE also highlighted structural vulnerabilities, noting that 81.6% of Pakistan’s energy imports pass through the Strait of Hormuz. Rising global oil prices, freight costs, and shipping risks could widen the trade deficit from $24 billion to $41.8 billion and push inflation from 7.1% to 11.1%, further threatening export competitiveness and the balance of payments.