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The Government of Pakistan has officially delayed the presentation of the federal budget for the fiscal year 2025-26 to June 10, shifting from its earlier scheduled date of June 2. According to officials familiar with the matter, the delay stems from the government’s ongoing struggle to finalise fiscal targets with the International Monetary Fund (IMF) under the terms of its extended loan programme.
While technical discussions with the IMF were scheduled to conclude on Thursday, sources confirmed that no breakthrough was achieved, and negotiations will now extend into next week.
Development Budget Falls Short of Planning Ministry Goals
The delay follows an earlier report by The News on May 9, which stated that the budget was initially set for June 2, with an allocation of Rs921 billion for development projects. This amount, however, falls significantly short of the Rs1,600 billion that the Ministry of Planning deemed necessary to support Pakistan’s infrastructure and socio-economic development ambitions.
This gap between proposed allocations and developmental requirements highlights the fiscal constraints facing the government as it juggles IMF-mandated targets with internal socio-economic priorities.
Economic Survey FY2025 to Be Released June 9
The Economic Survey FY2025, which reviews the economic performance of various sectors over the outgoing fiscal year, will be released on June 9, a day before the budget. The finance ministry confirmed the date and said the survey would outline key indicators, such as GDP growth, inflation, exports, foreign reserves, and fiscal deficit.
This survey is expected to shape the budget narrative and justify fiscal choices to both the domestic audience and international partners like the IMF.
IMF Negotiations Stalling Budget Finalisation
Ongoing discussions with the IMF remain a significant factor delaying the finalisation of the budget. Thursday marked what was supposed to be the final day of talks, with two separate sessions — morning and afternoon — held between government officials and IMF representatives. However, no agreement was reached in either session.
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The finance secretary led Pakistan’s delegation, which included the Federal Board of Revenue (FBR) chairman and other senior officials. The talks reportedly centered on reconciling Pakistan’s need for economic relief measures with the IMF’s demand for fiscal discipline and revenue enhancement.
Key Proposals: Tax Relief and Revenue Expansion
Officials revealed that Pakistan has submitted several proposals to the IMF during the discussions, aimed at providing tax relief for the salaried class and industrial sector, both of which have faced mounting financial pressures amid inflation and rising costs.
Key suggestions included:
- Reducing income tax burdens on salaried employees.
- Lowering corporate taxes to stimulate industrial activity and investment.
- Cutting non-development and development expenditures to manage fiscal space.
- Expanding the tax base, especially through the collection of agricultural income tax.
- Introducing mechanisms to enhance provincial revenue generation, a critical element in achieving fiscal sustainability.
These proposals are part of the government’s broader strategy to increase both tax and non-tax revenue, which remains a core demand of the IMF programme.
Pakistan Obligated to Align Budget with IMF Conditions
Under the terms of the ongoing $7 billion IMF loan programme, Pakistan is obligated to consult the IMF while determining key budgetary targets. “Eventually, the government will have to accommodate the IMF’s input while finalising fiscal goals,” a source close to the negotiations confirmed.
This condition is not new; previous budgets under IMF oversight have also included adjustments and policy changes aligned with Fund recommendations, especially in areas like energy subsidies, tax policy, and public sector reforms.
Fresh Loan and First Programme Review Approved
On May 9, the IMF’s Executive Board approved a $1.4 billion climate resilience loan for Pakistan, alongside the first review of its existing $7 billion Extended Fund Facility (EFF) programme. This approval unlocked about $1 billion in immediate disbursements, raising the total amount released to $2 billion under the 37-month programme.
In its official statement, the IMF acknowledged Pakistan’s progress under the programme, noting that its policy efforts have contributed to macroeconomic stabilisation, even amid global challenges. “Pakistan’s policy efforts under the programme have already delivered significant progress in stabilizing the economy and rebuilding confidence,” the IMF stated.
