The International Monetary Fund (IMF) mission visiting Pakistan has concluded talks with authorities focusing on economic developments, fiscal plans for the next financial year, and progress on reforms under the country’s IMF-supported programmes, it said in a statement issued early on Thursday.

The statement said that the mission visited Islamabad from May 13 to May 20, with the visit focusing on “recent economic developments, reform implementation, and the budget strategy for fiscal year 2027”.

Iva Petrova, who led the IMF mission, was quoted as saying that “constructive discussions” were held with authorities on economic developments, including disruptions from the Middle East conflict, the upcoming budget formulation and progress on the reform agenda under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).

“The authorities reaffirmed their commitment to a primary surplus target of two per cent of gross domestic product (GDP) in FY2027, which will support fiscal sustainability and continue to build resilience,” she said.

“The envisaged gradual fiscal consolidation will be supported by efforts to broaden the tax base, improve tax administration, enhance spending efficiency and public financial management at both federal and provincial levels,” she said, adding that discussions on the FY2027 budget will continue in the coming days.

According to the Fund, the State Bank of Pakistan (SBP) reiterated its commitment to maintaining an appropriately tight monetary policy stance to anchor inflation expectations and “will continue to closely monitor potential second-round effects from energy price increases”.

Furthermore, exchange rate flexibility should continue to serve as a key shock absorber, and efforts should continue to build a deeper foreign exchange interbank market, it said.

It went on to say that discussions also covered ongoing structural reforms, including in the energy sector and state-owned enterprises, product market liberalisation, and financial sector reforms aimed at supporting durable growth and attracting high-quality private investment.

It said that progress under the RSF was also discussed, including efforts to adopt a disaster risk financing framework, integrate climate considerations into budget and investment planning, and advance power subsidy reforms.

Concluding the statement, the IMF mission thanked the federal and provincial authorities for their “constructive engagement, strong collaboration, and continued commitment to sound policies”.

“The next mission, which is envisioned to include the Article IV consultation and EFF and RSF reviews, is expected to take place in the second half of 2026,” it said.

Earlier this month, the international money lender had approved the latest review of Pakistan’s reform programme. The decision had paved the way for disbursements of about $1.1bn from the EFF and $220m from the RSF, bringing total payouts under the two arrangements to roughly $4.8bn.

Meanwhile, for its part, the IMF has targeted Pakistan’s federal revenues at Rs17.145 trillion for 2026-27.

Provinces have also been asked to increase their revenue contribution by at least Rs400 billion, nearly 40 per cent of their existing share, in the coming fiscal year through more effective collection strategies in agriculture, property and services to remain in the IMF’s good books.

Additional input from Reuters