Pakistan’s upcoming budget to be shaped by IMF consultations

ISLAMABAD: The federal government is set to unveil the 2025-26 budget after extensive consultations with the International Monetary Fund (IMF), according to sources within the Ministry of Finance.

An IMF delegation is expected to visit Pakistan in the coming weeks for further discussions, with both virtual and in-person negotiations continuing until the budget’s finalisation, the sources said.

The budget, slated for presentation in early June, will incorporate economic policies and fiscal measures in line with IMF recommendations.

Officials disclosed that the IMF has agreed to offer limited relief in the real estate sector. Under the new budget, the federal excise duty on the first property sale will be eliminated, though withholding and income tax rates will remain unchanged.

The IMF Executive Board is anticipated to approve these recommendations by late May or June, coinciding with the budget's completion. Failure to adhere to IMF conditions could jeopardise Pakistan’s access to climate-related financial aid. 

The board’s review of Pakistan’s programme is expected to take place only after budgetary details are finalised, as the upcoming Spring Meetings in April will not include discussions on Pakistan’s financial assistance.

This development comes after Pakistan and the IMF reached a staff-level agreement (SLA) for the first review of the ongoing 37-month Extended Fund Facility (EFF). 

The deal, pending final approval, would unlock approximately $1 billion for Islamabad, raising total disbursements under the programme to around $2 billion.