Pakistan has reaffirmed its commitment to economic reforms after the IMF mission concluded talks in Islamabad with a pledge to achieve an IMF primary surplus target of 2% of gross domestic product in fiscal year 2027 28. The discussions focused on fiscal discipline, monetary policy, structural reforms, and the broader economic outlook amid regional and global challenges.
The International Monetary Fund mission completed its visit on Wednesday after holding detailed discussions with officials from the finance ministry and other economic institutions. The talks mainly reviewed Pakistan’s economic progress, reform implementation, and fiscal plans for the upcoming financial year.
The IMF delegation was led by advisor Iva Petrova. The mission remained in Islamabad from May 13 to May 20. Officials discussed the economic impact of the ongoing conflict in the Middle East and its effect on energy prices and market stability.
Pakistan Commits to Fiscal Discipline
According to the IMF statement, Pakistani authorities agreed to maintain strict fiscal discipline by targeting a primary surplus of 2 percent of GDP in FY2027 28. The lender described the discussions as constructive and appreciated the government’s continued commitment to economic reforms.
The IMF primary surplus target reflects the government’s attempt to strengthen public finances and improve investor confidence. A primary surplus means the government plans to collect more revenue than its non interest spending.
Officials believe this target will help reduce economic vulnerabilities and improve Pakistan’s financial position under the ongoing IMF programme.
Earlier this month, the IMF approved fresh funding of nearly 1.32 billion dollars for Pakistan. The country remains under a 7 billion dollar IMF support programme designed to stabilise the economy and support reforms.
State Bank Maintains Tight Monetary Policy
The IMF also highlighted the role of the State Bank of Pakistan in controlling inflation and stabilising the economy. According to the statement, the central bank has committed to maintaining an appropriately tight monetary policy stance.
The IMF said the SBP will closely monitor inflation risks, especially after the increase in global energy prices. Officials fear that rising fuel and commodity prices could create second round inflationary effects in the local economy.
The lender stressed that exchange rate flexibility should continue to absorb external shocks. It also encouraged Pakistan to deepen its foreign exchange interbank market to improve financial stability and investor confidence.
Economic experts believe stable exchange rate management and controlled inflation remain critical for Pakistan as the country continues to recover from previous financial pressures.
Structural Reforms Remain Key Focus
During the visit, both sides also reviewed progress on structural reforms under the IMF supported programmes. The discussions included reforms in the energy sector, state owned enterprises, product markets, and the financial sector.
The IMF said these reforms are necessary to support long term growth and attract quality private investment into Pakistan.
Energy sector reforms remained a major point of discussion. Pakistan continues to face circular debt issues and pressure from rising subsidy costs. Officials also reviewed progress on power subsidy reforms under the Resilience and Sustainability Facility programme.
The IMF further discussed climate related financial planning with Pakistani authorities. The talks included plans to adopt a disaster risk financing framework and integrate climate considerations into budget and investment decisions.
These reforms aim to strengthen Pakistan’s economic resilience against climate related disasters and financial shocks.
IMF Sees Significant Progress in Pakistan Economy
Last week, the IMF stated that Pakistan had made significant progress under the reform programme supported by the Extended Fund Facility and the Resilience and Sustainability Facility.
The lender said Pakistan’s policy implementation helped preserve macroeconomic stability despite challenges created by global uncertainty and the Middle East conflict.
According to the IMF, fiscal performance remained strong and Pakistan is expected to achieve a primary surplus of 1.6 percent of GDP during FY2026 in line with programme targets.
The report noted that inflation increased due to higher global commodity prices and rising domestic energy costs. However, the IMF acknowledged that overall economic indicators showed improvement.
Pakistan’s growth momentum improved during the first half of the current fiscal year. The current account also remained broadly balanced while foreign exchange reserves increased beyond earlier expectations.
The IMF said Pakistan’s reserves reached nearly 16 billion dollars by the end of December compared to 14.5 billion dollars earlier in the year.
Total disbursements under both IMF programmes now stand at around 4.8 billion dollars.
Budget Talks to Continue
The IMF confirmed that discussions on Pakistan’s FY2027 budget will continue in the coming days. Another IMF mission is expected during the second half of 2026 for the Article IV consultation and further reviews under the Extended Fund Facility and the Resilience and Sustainability Facility.
Officials hope continued cooperation with the IMF will help Pakistan maintain economic stability, strengthen financial discipline, and attract international investment in the coming years.