Washington, May 21 (IANS) The International Monetary Fund (IMF) has said its staff mission had held “constructive discussions” with Pakistani authorities on the country’s economic situation, including the fallout from the ongoing conflict in the Middle East, while reviewing Islamabad’s reform commitments and budget strategy for fiscal year 2027.
An IMF mission led by Iva Petrova visited Islamabad from May 13 to 20. The talks focused on recent economic developments, implementation of reforms, and the formulation of Pakistan’s next federal budget, a media release said on Wednesday (US time).
“We had constructive discussions with the authorities on recent economic developments, including the impact of ongoing disruptions from the conflict in the Middle East, the FY2027 budget formulation, and progress on the reform agenda under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF),” Petrova said in a statement issued after the visit.
The IMF said Pakistani authorities had “reaffirmed their commitment to a primary surplus target of 2 per cent of GDP in FY2027”, describing the target as necessary to support fiscal sustainability and economic resilience.
According to the statement, the planned fiscal consolidation would be backed by efforts to “broaden the tax base, improve tax administration, enhance spending efficiency and public financial management at both federal and provincial levels”.
The IMF said discussions on Pakistan’s FY2027 budget would continue in the coming days.
The statement also underlined concerns over inflation and energy prices amid regional instability.
“The State Bank of Pakistan reiterated its commitment to maintaining an appropriately tight monetary policy stance to anchor inflation expectations and will continue to closely monitor potential second-round effects from energy price increases,” Petrova said.
The IMF added that exchange rate flexibility should continue to play a stabilising role for Pakistan’s economy.
“Exchange rate flexibility should continue to serve as a key shock absorber, and efforts should continue to build a deeper foreign exchange interbank market,” the statement said.
The talks also covered a broad set of structural reforms, including Pakistan’s energy sector, state-owned enterprises, product market liberalisation, and financial sector reforms aimed at encouraging long-term private investment.
The IMF said progress under the Resilience and Sustainability Facility was also reviewed, including work on a disaster risk financing framework, integrating climate priorities into budget planning, and reforms related to power subsidies.
The IMF said its next mission to Pakistan, expected in the second half of 2026, would likely include the Article IV consultation along with reviews under both the EFF and RSF programmes.
–IANS
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