Business Recorder
ISLAMABAD: Pakistan and the International Monetary Fund (IMF) are expected to continue budget negotiations in the coming days as both sides remain engaged on key fiscal issues aimed at strengthening revenue generation for the next fiscal year, well-placed sources told Business Recorder . However, no official statement was issued till filing of this report. The talks, which formally began on May 13 in Islamabad ahead of the federal budget for FY2026-27, are being held between Pakistani authorities and an IMF mission led by Mission Chief Iva Petrova. The discussions focused on macroeconomic stabilisation, preparations for the upcoming federal budget and the broader reform agenda aimed at strengthening fiscal and external sustainability while fostering sustainable economic growth. Sources said the IMF mission, which was initially expected to conclude discussions on Wednesday, is now likely to continue longer and virtually as negotiations continue on several critical matters despite broad agreement on most budgetary proposals. Officials said the Fund is pressing Pakistan to ensure stronger and more sustainable revenue measures to meet fiscal consolidation goals under the ongoing programme. The IMF has also sought tougher fiscal commitments from provinces, including an additional Rs430 billion in revenue mobilisation and a combined provincial cash surplus of nearly Rs2 trillion to support the federal fiscal framework. Expenditure projections in the latest IMF report indicate that the defence budget may rise from Rs2.564 trillion to Rs2.665 trillion in the upcoming fiscal year. The federal Public Sector Development Programme (PSDP) is likely to be allocated Rs986 billion. Sources further disclosed that a provisional understanding has been reached to enhance quarterly payments under the Benazir Income Support Programme from Rs14,500 to Rs18,000. The continuation of talks underscores the difficult balancing act facing Pakistan as it negotiates tough IMF-backed fiscal measures while attempting to maintain economic stability, revive growth and contain inflationary pressures ahead of the federal budget announcement, officials added. Copyright Business Recorder, 2026
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