Pakistan and the International Monetary Fund (IMF) have not yet reached a full agreement on next year’s budget targets. The IMF team visited Pakistan from May 19 and held discussions with government officials. Talks covered the country’s economic situation, loan program progress, and key budget goals. Although both sides made progress, some matters are still unresolved. Therefore, the IMF announced that talks will continue in the coming days.
During the meetings, Pakistan showed its commitment to financial stability and protecting social spending. Both sides agreed to aim for a primary budget surplus of 1.6% of GDP. They also discussed expanding the tax base and increasing government income. The IMF pushed for better spending control and reforms in the energy sector. Reducing the cost of electricity production was another major focus of the talks.
Moreover, the IMF asked Pakistan to keep its tight monetary policy to fight inflation. It suggested keeping inflation between 5% and 7%. Discussions also focused on improving foreign exchange reserves and keeping the currency market stable. The IMF stressed the need to maintain a flexible exchange rate. These steps aim to support long-term economic growth.
Meanwhile, Pakistani officials requested tax relief in certain areas to help economic recovery. These include the salaried class and the real estate sector. The IMF did not reject the proposals but asked for proper data and a clear plan. It also asked provinces to cut spending and increase their income. Importantly, the IMF demanded full efforts to collect agricultural income tax.
Talks between the IMF and Pakistan began on May 15 through virtual meetings from Türkiye. Later, in-person meetings started on May 19 in Pakistan. So far, no final conditions have been set. The IMF said the next review of the loan and climate funding program is likely in the second half of 2025. Until then, both sides will keep working on a final agreement.