ISLAMABAD (PEN) : Pakistan is set to present its federal budget for the fiscal year 2025-26 following consultations with the International Monetary Fund (IMF), officials confirmed on Thursday. According to sources within the Ministry of Finance, discussions with the IMF will be a crucial part of the budget finalization process, and a new IMF delegation is expected to visit Pakistan in the near future for further consultations.
IMF Consultation Process and Key Budget Discussions
The Ministry of Finance revealed that both in-person and online consultations with the IMF will continue ahead of the budget’s presentation, which is scheduled for the first week of June. The key focus of these discussions will be to align Pakistan’s economic policies with the IMF’s recommendations, particularly in terms of revenue generation and fiscal policies.
Officials familiar with the matter stated that one of the key points under discussion is the real estate sector, where the IMF has agreed to provide limited relief. Notably, the federal excise duty on the first sale and purchase of property will be removed under the new budget. However, the existing withholding and income tax rates on property transactions will remain unchanged, and the tax rate for property sellers will also stay the same.
Potential Climate Funding Implications
While the government moves forward with its budget preparations, concerns remain over Pakistan’s ability to meet its commitments under the ongoing IMF bailout program. Failure to meet the agreed terms could risk Pakistan’s access to critical climate-related financial assistance, an important source of funding for the country’s environmental initiatives.
As per the ongoing IMF agreement, the lender’s Executive Board is expected to approve the recommendations made by both parties by late May or June, just ahead of the budget’s finalization. The IMF Executive Board will review Pakistan’s economic program after the details of the budget are completed, although the Spring Meetings in April will prevent any immediate discussion on Pakistan’s program.
IMF Bailout and Financial Assistance
The government’s compliance with the IMF’s requirements is key to securing the next phase of its 37-month bailout program. The deal, still pending approval from the IMF’s Executive Board, is expected to unlock approximately $1 billion in funding under the Extended Fund Facility (EFF), bringing the total disbursements under the program to nearly $2 billion.
These developments follow the staff-level agreement (SLA) between Pakistan and the IMF, which aims to ensure economic stabilization and support Pakistan’s fiscal recovery amid ongoing challenges.
