Pakistan targets Rs2.8 trillion surplus, $5.6 billion net reserves boost under IMF deal

Pakistan has agreed with the International Monetary Fund (IMF) to maintain a tight fiscal stance in the upcoming budget, targeting a primary surplus of Rs2.8 trillion and an increase of $5.6 billion in net foreign exchange reserves.

The Express Tribune reported that the understanding was reached during the third review talks, with formal approval by the IMF executive board expected in early May.

As part of the agreement, the government has committed to raising net reserves to eliminate the current negative position, aiming to align reserves with external liabilities by June 2027. Pakistan has also requested a revision of the end-June 2026 net international reserves target to negative $4.1 billion.

Officials said current gross reserves of around $15 billion are largely supported by external borrowing, while net reserves remain negative after adjusting for liabilities.

On the fiscal side, the government plans to post a primary surplus of Rs2.8 trillion, equivalent to around 2% of GDP, compared to Rs3.4 trillion in the current fiscal year.

The Federal Board of Revenue is expected to collect Rs15.564 trillion in taxes, or about 11% of GDP, with measures including a reduction in sales tax exemptions, the introduction of an asset-based regime for small and medium enterprises, and the expansion of the tax base.

Authorities have also committed to adding one million new income tax filers who must be active taxpayers rather than zero-return filers.

To support vulnerable segments, the allocation for the Benazir Income Support Programme is proposed to increase by 22% to Rs845 billion, with plans to raise quarterly stipends to Rs19,500 and expand coverage.

Provincial governments will be required to generate a combined cash surplus of around Rs1.65 trillion, while total public spending on health and education is projected at Rs4.3 trillion, up from Rs3.5 trillion in the current fiscal year.

The IMF has also set limits on circular debt accumulation, capping the annual increase at Rs300 billion.

Economic growth for the next fiscal year is projected at 3.5% by the International Monetary Fund, below the government’s target of 5.1%, reflecting the impact of fiscal tightening and external pressures.