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 covered 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. A press release issued on Wednesday (U.S. time) indicated that the discussions focused on recent economic conditions, the status of implemented 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 impacts of conflicts in the Middle East, preparations for the fiscal year 2027 budget, and the progress of the reform agenda under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF).”
The IMF reported that Pakistani officials reiterated their commitment to a primary surplus target of 2% of GDP for the fiscal year 2027, deemed essential for economic stability and resilience.
To enhance fiscal discipline, the IMF outlined plans to broaden the tax base, improve tax administration, enhance spending efficiency, and strengthen public financial management at both federal and provincial levels.
The discussions regarding the fiscal year 2027 budget are expected to continue in the coming days. Concerns were also raised about inflation and energy prices, particularly amid regional instability.
Petrova emphasized that the State Bank of Pakistan remains committed to a stringent monetary policy to control inflation. She also mentioned that potential impacts of changes in energy prices will be closely monitored.
The IMF advised Pakistan to maintain a more flexible exchange rate to better absorb external shocks and to continue efforts to deepen and strengthen the foreign exchange market.
The talks also included discussions on 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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