Govt has decided to inform IMF about rising tensions with India, specially if conflict forces increase in defence budget or affects fiscal planning. Decision comes just before official talks with Fund, which are starting on May 14, ahead of Pakistan’s 2025-26 budget.
Finance ministry sources say IMF discussions will focus on full budget outline — expected income, spending limits, and tax plans. One senior official said govt will raise issue of defence spending if border situation gets worse.
“Any spike in military costs due to India tension will be shared with IMF when we talk,” said person linked to the talks.
Recent clashes on Line of Control caused worry among economic experts who already concerned about tight fiscal space and strict IMF demands. Sources said any big change in spending — mainly for defence — has to be clearly discussed with Fund to avoid problems in talks.
Govt is looking at very high tax collection goal for next year. Revenue board (FBR) might be given target over Rs14,000 billion. Plan is to keep tax-to-GDP ratio near 11% for next financial year — which fits IMF targets.
One controversial topic — super tax — also expected in discussion. Business sector unhappy with it, saying it adds big burden. A source noted tax rate in some sectors reached near 39%, which is way above global averages. Officials say govt might rethink this tax to fix market distortions.
Upcoming IMF meeting very important as Pakistan prepares national budget and tries for new loan program. Previous standby deal with IMF ended, and now Islamabad wants longer, deeper bailout to fix economy and continue reforms.
IMF also to be updated on reforms like widening tax base, fixing power sector issues, and overhauling state-owned companies — all key points from earlier IMF reviews.
