Pakistan IMF Agree On Budget 2026–27 Framework

ISLAMABAD: (Mudassar Iqbal/ News Desk) – Pakistan and the International Monetary Fund (IMF) have reached a broad agreement on the macroeconomic framework for the upcoming budget 2026–27, setting key targets for growth, inflation, and fiscal consolidation.

According to official sources, the Ministry of Finance has projected real GDP growth at 4.1% for the next fiscal year, while the IMF has maintained a more conservative estimate of 3.5%. The average inflation rate based on the Consumer Price Index (CPI) is projected at around 8.6%, slightly higher than the IMF’s forecast of 8.4%.

The discussions also finalized a primary budget surplus target of 2% of GDP, equivalent to approximately Rs2.9 trillion, which will serve as a key anchor for fiscal discipline in the upcoming budget.

Ishaq Dar Reviews Tax Proposals For Federal Budget

Finance Minister Muhammad Aurangzeb held a virtual meeting with provincial finance ministers and economic teams, urging them to implement additional revenue measures worth Rs400 billion to help achieve the agreed fiscal targets.

Under the proposed framework, provinces are expected to play a significant role in revenue generation, particularly through improved enforcement of the General Sales Tax (GST) on services and broader tax compliance measures.

The IMF has also emphasized reforms in agricultural income taxation, with new rates expected to apply from FY26, though revenue impacts will be reflected in FY27. Provinces are advised to strengthen data sharing with the Federal Board of Revenue, enhance automation, and improve enforcement capacity.

The external sector outlook projects a current account deficit of around $4 billion—less than 1% of GDP—supported by estimated exports of $35 billion, imports of $70 billion, and remittances of approximately $42 billion.

Independent economists, however, have expressed concerns that inflation could rise to nearly 11%, warning of potential monetary tightening by the State Bank of Pakistan if price pressures persist, particularly due to elevated fuel costs.

Officials confirmed that provinces have agreed not to introduce policies that could undermine IMF program commitments and will consult through the Ministry of Finance before implementing any measures that may affect agreed targets.

The agreement marks a key step in shaping Pakistan’s fiscal strategy for 2026–27 under continued IMF engagement.