Pakistan will not introduce a mini-budget before June as the International Monetary Fund (IMF) has expressed satisfaction with the country’s economic measures, Express News reported on Friday. The final round of policy-level talks between Pakistan and the IMF is set to conclude today.
Finance Minister Muhammad Aurangzeb is scheduled to meet the IMF delegation today, followed by an iftar dinner in their honor. The global lender will then prepare an assessment report for its Executive Board, which will decide on releasing the next $1 billion tranche for Pakistan.
Key agenda items in the final discussions include Pakistan’s budgetary targets, fiscal performance, and tax collection shortfalls. While the IMF has acknowledged progress, it has urged Pakistan to remove tax exemptions on solar panels and electric vehicles, arguing that these primarily benefit wealthier segments. The lender has also pressed for stricter fiscal discipline and the elimination of tax breaks on EV parts.
Separately, Pakistan has requested the IMF to allow tax cuts in line with regional countries to curb capital flight, though the lender remains concerned over revenue collection from retailers and real estate. The IMF has also warned against pursuing rapid economic growth, cautioning that it could strain fiscal and external balances.
The IMF acknowledged Pakistan’s strong program implementation and the considerable progress made in several areas, including planned fiscal consolidation to reduce public debt durably, maintenance of sufficiently tight monetary policy to maintain low inflation, acceleration of cost-reducing reforms to improve energy sector viability, and implementation of structural reforms to accelerate growth while strengthening social protection and rebuilding health and education spending.
The IMF mission and Pakistani authorities agreed to continue policy discussions virtually to finalise these discussions over the coming days, with the IMF staff expected to finalise its recommendations for the Executive Board’s review, a prerequisite for Board approval for the release of the next tranche under the EFF.
The IMF’s Executive Board will review the staff’s recommendations, and upon approval, the next tranche of funding will be disbursed, supporting Pakistan’s ongoing efforts to stabilise and grow its economy.
