IMF team in talks with Pakistan on budget-making process

ISLAMABAD: The visiting technical mission of the International Monetary Fund (IMF) has been negotiating with Pakistani authorities on the formulation of budget-making process and taking steps for the functioning of newly established Tax Policy Office (TPO) under the umbrella of Ministry of Finance.

“A visiting technical mission of the IMF has been negotiating the formulation of upcoming budget and scrutinising its whole process. The recommendations finalised in the technical mission could result in the placement of a structural benchmark after endorsement of the review mission of the IMF, scheduled to visit Islamabad in Feb/ March 2026,” top official sources confirmed while talking to The News here on Wednesday.

The TPO, which came into being under the jurisdiction of the Ministry of Finance, will finalise its functioning process, and then the tax proposals might also be firmed up during the ongoing technical level parleys. The IMF’s upcoming review mission, expected to visit Islamabad in Feb/ March 2026, would then finalise tax proposals for the next budget 2026-27.

In the past, there was a practice that the IMF review mission used to visit Islamabad just ahead of the budget announcement, so there was not much time available for holding consultations on the formulation of budgetary proposals. Now the IMF has dispatched its technical mission after receiving a formal request from Islamabad.

Pakistan’s Minister for Finance Muhammad Aurangzeb and State Bank of Pakistan Governor Jameel Ahmed are all set to sign a Letter of Intent (LoI) for forwarding to the IMF’s Executive Board. This is for consideration of the request to approve the second review and release of the third tranche worth $1 billion and the first installment of $200 million under the Resilient Sustainability Facility (RSF), probably in early December 2025.

One top official said that the visiting technical mission would stay in Islamabad for a week to discuss the formulation of the budget process, including revenues and expenditures, and how the projection and forecasting of the budget on a medium-term basis could be made transparent by ensuring its traceability.

The visiting team will also be briefed on the formation of a high-powered committee to oversee the implementation of a digitalised Public Finance Management (PFM) master plan, which aims to improve transparency and accountability in budget formulation and execution.

The technical team of the Fund sought details on how supplementary grants were utilised during the past decade and whether the Auditor General of Pakistan conducted a special audit to examine the mechanism, transparency and effectiveness of these allocations. The Fund’s officials want future budgetary practices to ensure that all ministries and divisions remain within their approved allocations and provide full justification before seeking additional funds.

The proposed changes are expected to address financial discipline, legal frameworks, medium-term planning, service delivery and corruption prevention under the budgetary framework.