Washington, May 21: A team from the International Monetary Fund (IMF) has reported that it engaged in “constructive discussions” regarding Pakistan’s economic situation. The talks included the impact of ongoing conflicts in the Middle East, progress on the country’s economic reforms, and the budget strategy for the fiscal year 2027.
Led by Eva Petrova, the IMF team was present in Islamabad from May 13 to May 20. According to a press release issued on Wednesday (U.S. time), the discussions focused on recent economic conditions, the status of reforms, and preparations for Pakistan’s upcoming federal budget.
In her statement, Petrova noted, “We had constructive discussions with officials on recent economic developments, the impact of conflicts in the Middle East, the preparation of the fiscal year 2027 budget, and the progress of the reform agenda under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).”
The IMF indicated that Pakistani officials reaffirmed their commitment to a primary surplus target of two percent of GDP for the fiscal year 2027, which is deemed essential for economic stability and resilience.
To enhance this fiscal discipline, efforts will be made to broaden the tax base, improve tax administration, enhance spending efficiency, and strengthen public financial management at both federal and provincial levels.
The IMF also stated that discussions regarding the fiscal year 2027 budget will continue in the coming days. Concerns were raised in the statement regarding inflation and energy prices, especially amid regional instability.
Petrova emphasized that the State Bank of Pakistan remains committed to maintaining a tight monetary policy to control inflation, and it will continuously monitor the potential impacts of changes in energy prices.
Furthermore, the IMF advised Pakistan to keep its exchange rate more flexible to help absorb external shocks and to continue efforts to deepen and strengthen the foreign exchange market.
Discussions also covered reforms in the energy sector, state-owned enterprises, product markets, and the financial sector to promote private investment in the long term.
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