The International Monetary Fund (IMF) has released a detailed post-disbursement review report on Pakistan, introducing 11 new conditions tied to its ongoing loan program.
The report outlines key fiscal targets, energy pricing reforms, tax expansion measures, and structural changes across multiple sectors of the economy.
According to the report, the IMF has added 11 fresh conditions for Pakistan, bringing the total number of program requirements to 55.
These include preparations for the FY2027 budget, adjustments in gas and electricity tariffs, and broader fiscal reforms aimed at improving economic discipline.
The IMF said gas tariffs will be revised in July 2026 and February 2027, while electricity tariff adjustments are scheduled for January 2027.
Revenue targets
The IMF projects Pakistan may introduce around 430 billion rupees in new taxes in the upcoming fiscal year.
The Federal Board of Revenue (FBR) tax collection target is estimated at 15,267 billion rupees, including:
- Direct taxes: 7,413 billion rupees
- Federal excise duty: 1,043 billion rupees
- Sales tax: 4,727 billion rupees
- Customs duty: 1,651 billion rupees
- Petroleum levy: 1,727 billion rupees
Non-tax revenue is projected at 2,768 billion rupees.
Debt, spending, and budget outlook
The IMF estimates Pakistan will spend 7,824 billion rupees on interest payments in the next fiscal year.
Of this, 6,652 billion rupees will go toward domestic debt servicing, while 1,107 billion rupees will cover external debt interest.
Defense spending is projected at 2,665 billion rupees, while the Public Sector Development Program (PSDP) allocation is estimated at 986 billion rupees.
The IMF also estimates Pakistan may borrow 4,943 billion rupees in the upcoming fiscal year.
Macroeconomic projections
The IMF report outlines key economic forecasts for Pakistan:
- GDP growth: 3.6% in FY2026
- Inflation: 7.2% average
- Foreign exchange reserves: expected to reach $17.5 billion
- Unemployment: 6.9%
- Debt-to-GDP ratio: 73.8%
The IMF noted that despite global uncertainty and regional conflict, Pakistan has made progress under its stabilization program.
Impact of global conflicts
The report highlights that tensions in the Middle East have affected Pakistan’s economic performance.
According to the IMF, the conflict has disrupted supply chains, reduced purchasing power, and contributed to rising inflation due to higher energy prices.
Energy sector reforms and price adjustments
The IMF emphasized continued reforms in Pakistan’s energy sector, including tariff adjustments and circular debt management.
Key points include:
- Electricity and gas prices will be adjusted regularly based on cost recovery
- Subsidies will be targeted only toward low-income groups
- Electricity subsidy cap set at 830 billion rupees (0.6% of GDP)
- Circular debt reduction targets set through 2031
The government has also committed to completing reforms in power distribution companies and improving efficiency through privatization and market reforms.
Tax reforms and anti-evasion measures
The report highlights major efforts to strengthen Pakistan’s tax system.
Measures include:
- Digital invoicing made mandatory for sales tax filers
- Expanded audit systems aligned with international standards
- Hiring of new tax auditors
- Monitoring of high-risk sectors like sugar, cement, tobacco, and fertilizer
The IMF estimates these reforms could generate tens of billions of rupees in additional revenue.
Pakistan has also committed to improving tax transparency between federal and provincial governments.
Agricultural income tax implementation challenges were noted, while provinces are expected to improve collection using shared data systems.
The IMF stressed the importance of improving competition in business sectors to support long-term economic growth.
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