Pakistan may present its budget for FY26 earlier than scheduled to meet the International Monetary Fund (IMF) board’s approval requirements before June-end, according to Topline Securities. The signing of a Staff Level Agreement (SLA) between Pakistan and the IMF could take a few weeks, as the government may need to share new budgetary measures with the lender.
“Even if the SLA is finalized earlier, board approval may come with preconditions such as the passage of the FY26 budget in line with IMF guidelines,” Topline Securities noted in a recent report.
An IMF delegation, led by Nathan Porter, visited Islamabad and Karachi from February 24 to March 14, 2025, for discussions on Pakistan’s economic program under the Extended Fund Facility (EFF) and a potential new agreement under the Resilience and Sustainability Facility (RSF).
Following the visit, Porter stated that the IMF and Pakistani authorities had made “significant progress” toward reaching an SLA. He highlighted that Pakistan’s program implementation remained strong, with notable advances in fiscal consolidation to reduce public debt, maintaining a tight monetary policy to curb inflation, and accelerating energy sector reforms. Additionally, discussions covered structural reforms aimed at boosting economic growth, enhancing social protection, and strengthening health and education spending.
The IMF mission and Pakistani authorities will continue virtual discussions to finalize policy measures in the coming days. According to Topline, these discussions will focus on new tax measures in the FY26 budget, energy sector reforms, and progress on the privatization agenda.
The brokerage firm also warned that delays in the IMF review could impact Pakistan’s external accounts, potentially forcing the government to rely on costly commercial borrowing to meet its reserve targets.
Once the ongoing discussions are completed, the IMF staff will finalize recommendations for the Executive Board’s review, a necessary step before the approval and release of the $1 billion loan tranche.
