Amid rising regional tensions, the IMF is said to have asserted that timely adjustment of fuel prices is essential in order to avoid financial strain.
Image: IANS
The Shehbaz Sharif-led government in Pakistan is reportedly under extreme pressure from the International Monetary Fund (IMF) to come up with strict economic decisions in the upcoming budget for FY 2026-27.
The global body has demanded the Pakistani government to further reduce tax exemptions and concessions in the next budget, sources told ARY News. They added that the IMF has even asked Pakistan to avoid long-term subsidies on petroleum products.
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Amid rising regional tensions, the IMF is said to have asserted that timely adjustment of fuel prices is essential in order to avoid financial strain.
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The government should promptly implement recommendations by the NEPRA and OGRA regarding electricity and gas tariffs, the IMF reportedy told the government.
As of now, negotiations are going on between the Sharif-led government and the IMF to set key targets for the next budget, while there are expectations of strict fiscal measures.
What to expect?
Insiders told ARY News that the fiscal measures could include broadening the tax base, controlling public expenditure and reducing sales tax exemptions.
The Pakistani government is looking forward to further increase the tax-to-GDP ratio, while the Federal Board of Revenue’s tax target for the upcoming fiscal year is expected to remain around PKR 15.5 trillion.
Meanwhile, the IMF has warned that the rising energy and food prices in Pakistan could push inflation beyond targets by the end of the current fiscal year.
Although Pakistan’s economy is showing signs of slight improvement, the Fund noted that global uncertainties continue to pose risks.
The Pakistani government estimates highlight that the GDP growth in FY2026 could remain between 4 to 4.5 per cent, with a current account surplus target of 1.6 per cent of GDP.
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