- I see that the IMF flags a breach of Rs1,675bn in power‑sector debt.
- I notice that the fund seeks a current‑account deficit projection.
- I see that FBR retains the Rs15,264bn annual tax‑collection target.
Pakistan and the International Monetary Fund (IMF) are going to have discussions about economic goals after a team from the IMF provided its first version of the Memorandum of Financial and Economic Policies (MEFP), according to The News, on Saturday.
The IMF team is going to stay in Islamabad for a few days, probably until the middle of next week. If both sides agree on the MEFP, a staff-level agreement (SLA) will be made; however, if there is no agreement, the talks will continue online.
The IMF is worried about the power sector failing to meet the Circular Debt (CD) target by the end of June 2026. The Circular Debt was at Rs1,675 billion, which is more than what was agreed for the end of June 2026. The government set aside Rs830 billion as a power-sector subsidy for FY27.
The IMF wants the government to stop the cross-subsidy for power usage up to 200 units and use a targeted subsidy through BISP, which will start in January 2027.
The legislation related to the Sovereign Wealth Fund (SWF) will be approved by Parliament. The tax collection target of the Federal Board of Revenue (FBR) is Rs15,264 billion. Will stay the same. The tax system did better than expected by Rs27 billion in the quarter of the current fiscal year.
The FBR has not asked for a change in its target at this time.
During the meetings, the IMF said that the Current Account Deficit (CAD) should be shown as higher, up to $4 billion, for the fiscal year.
The Ministry of Finance had said earlier, before the IMF review mission, that the CAD would be around $2.7 billion for the fiscal year.
The Annual Plan for 2026-27, which was approved by the National Economic Council (NEC) led by Prime Minister Shehbaz Sharif, said the CAD would be $3.6 billion for the current fiscal year.
Under the Annual Plan for FY27, the overall current account deficit is expected to stay around $3.599 billion in FY2026-27, assuming a ceasefire leads to a deal among the parties in the Gulf region.
If the conflict in the Gulf continues for a time, it will negatively impact Pakistan’s external sector. Trade with GCC countries could face disruptions, which would harm exports of goods and services. It may also reduce remittance inflows from over a million workers in the Gulf, a key source of foreign exchange for Pakistan’s balance of payments. At the time, global energy supply-chain issues caused by the war have raised oil import costs, making the trade deficit worse according to the report.
Pakistan saw an account deficit of $543 million during the first two months of FY27 covering July and August. The State Bank of Pakistan (SBP) said this shows a 36% improvement compared to the $853 million deficit recorded in the period of the previous fiscal year FY26.
The International Monetary Fund (IMF) also completed its Article IV consultations. This is a process where the IMF reviews a member country’s economic and financial situation and discusses economic policies and possible risks.
Pakistani authorities told the IMF that the GDP growth rate for the fiscal year is likely to be around 4%. However, the State Bank of Pakistan (SBP) has forecast growth between 3.5% and 4.5%.
The government targets GDP growth at 4%, with agriculture expected to grow by 3.6%, the sector by 4.5%, and services by 4.2%. On inflation, the CPI-based projection is 8.2%. The IMF believes inflation might remain high, averaging between 8.5% and 9.5% during the current fiscal year.
