IMF asks Pakistan to avoid fuel subsidies in budget 2FY-026–27

The initial virtual discussions between Pakistani authorities and the IMF are currently underway regarding budget planning

ISLAMABAD: (UrduPoint/UrduPoint / Pakistan Point News-May 5^th, 2026) The International Monetary Fund has asked the Government of Pakistan to refrain from providing subsidies on petroleum products in the upcoming Federal budget FY-2026–27, as part of ongoing policy-level consultations.

The sources said that the initial virtual discussions between Pakistani authorities and the IMF are currently underway regarding budget planning.

During these consultations, the Fund stressed that timely adjustments in energy and fuel prices are crucial to prevent additional fiscal pressure.

The IMF also emphasised the need for immediate implementation of recommendations put forward by regulatory bodies concerning electricity and energy tariffs.

The sources further revealed that the Fund has advised the government to keep tax exemptions and concessions to a minimum in the next budget. The proposals under consideration include expanding the tax net, reducing sales tax exemptions, and implementing further expenditure control measures.

In addition, the IMF has recommended increasing Pakistan’s tax-to-GDP ratio by at least one percentage point.

The officials said the key fiscal targets for the upcoming budget are being finalised in coordination with the IMF. They added that with improved global economic conditions and continued reforms, the country’s medium-term economic growth could reach around 5.5% in the next fiscal year.