IMF Begins Consultations With Pakistan on Next Federal Budget, Urges End to Fuel Subsidies

Islamabad: Pakistan has initiated early virtual consultations with the International Monetary Fund (IMF) to set key targets for the upcoming federal budget, according to sources in the Ministry of Finance.

During the discussions, the IMF reportedly advised Pakistan to avoid continuing subsidies on petroleum products and instead ensure timely adjustments in energy and fuel prices to reduce fiscal pressure on the national economy.

The IMF further emphasized that regulatory recommendations regarding electricity and energy tariffs should be implemented without delay to ensure financial stability in the power sector.

Sources said the lender also suggested reducing tax exemptions, concessions, and special relief measures in the upcoming budget as part of broader fiscal consolidation efforts.

As part of ongoing negotiations, proposals are under consideration to expand the tax net and further reduce government expenditures. The IMF has also recommended increasing the tax-to-GDP ratio by at least one percent annually to strengthen revenue generation.

Additionally, the Fund urged Pakistan to adopt strict measures to manage and reduce the burden of public debt through sustained fiscal discipline.

The consultations come at a crucial time as Pakistan prepares its next federal budget amid ongoing economic challenges, with policymakers balancing growth priorities and fiscal stability under IMF guidance.