ISLAMABAD (PEN) : Pakistan’s government could present its budget for the fiscal year 2026 earlier than usual in an effort to secure approval from the International Monetary Fund (IMF) board. Topline Securities highlighted the possibility in a report released on March 17, 2025, suggesting that the government may share key budgetary measures with the IMF ahead of time to meet the board’s approval deadline before the end of June.
According to the brokerage firm, even if a Staff-Level Agreement (SLA) is reached soon, the IMF’s board approval might still come with preconditions, including the passage of the FY26 budget in line with IMF guidelines. These conditions could affect the timing of the approval process.
An IMF delegation, led by mission chief Nathan Porter, concluded a visit to Islamabad and Karachi on March 14, 2025, following discussions on the first review of Pakistan’s economic program under the Extended Fund Facility (EFF). The talks also touched on a potential new arrangement through the IMF’s Resilience and Sustainability Facility (RSF).
Porter stated in a post-visit statement that both the IMF and Pakistani authorities had made “significant progress” toward reaching a SLA. He noted the successful implementation of key areas, including fiscal consolidation to reduce public debt, tight monetary policies to curb inflation, and reforms to improve the energy sector’s viability.
The IMF mission also discussed the structural reforms needed to accelerate growth, strengthen social protection, and increase spending on health and education. Following these discussions, virtual talks will continue to finalize details, focusing on new tax measures in the upcoming budget, energy sector reforms, and the ongoing privatization plan.
Topline Securities added that delays in the IMF review could negatively impact Pakistan’s external accounts. As a result, the government may need to rely on expensive commercial borrowings to meet reserves targets if the IMF review is delayed.
Once the virtual discussions conclude, the IMF staff will finalize their recommendations for the Executive Board’s review, which is crucial for the approval of the $1 billion tranche.
