Negotiations between Pakistan and the International Monetary Fund (IMF) over the upcoming federal budget are still underway, with differences persisting on key economic targets and the overall macroeconomic framework.
Both sides are engaged in discussions aimed at finalising fiscal priorities for the next financial year. The two sides remain divided over Pakistan’s economic direction for the next fiscal year.
The government has proposed a 4.1% growth target, while the IMF estimates growth at around 3.5%. For the current year, the government set a target of 4.2%, while actual performance has been recorded at 3.7%.
Inflation and macroeconomic concerns
The government has projected average inflation at 8.6% for the next fiscal year.
However, officials have cautioned that inflation could rise further if geopolitical tensions in the Middle East continue to affect global markets and energy prices.
Tax revenue and provincial targets
The IMF has reportedly demanded increased tax collection efforts at both federal and provincial levels.
Provinces have been directed to raise revenue by approximately 40%, with a combined target of around Rs400 billion from sectors such as:
- Agriculture
- Property
- Services
The aim is to broaden the tax base and improve overall fiscal performance.
The government has proposed maintaining a primary surplus target of 2% of GDP in the upcoming budget.
The current account deficit is projected at around 1% of GDP, equivalent to nearly $4 billion.
Imports are estimated to reach $70 billion, raising concerns about widening trade deficits if export growth does not improve.
Authorities remain optimistic about strong inflows from overseas workers, with remittances expected to exceed $42 billion in the next fiscal year.
These inflows are seen as a key factor in stabilising Pakistan’s external account position.
