The International Monetary Fund has urged the Government of Pakistan to phase out subsidies on petroleum products in order to reduce growing fiscal pressure and improve economic stability.
According to sources, preliminary virtual consultations are underway between the Government of Pakistan and the IMF regarding the preparation of the upcoming budget for 2026-27, where key economic matters are being discussed in detail.
During these discussions, the IMF emphasized the need for timely adjustments in energy and fuel prices to help reduce the fiscal deficit and maintain economic balance.
The IMF also recommended limiting tax exemptions and incentives in the upcoming budget, reducing sales tax concessions, and expanding the tax base to enhance government revenue collection.
Sources further stated that the institution has proposed increasing the tax-to-GDP ratio by at least one percent, while additional measures to cut public expenditures are also under consideration to improve fiscal discipline.
Ongoing talks between the government and the IMF are also focusing on setting economic targets for the next fiscal year, with expectations that the growth rate could reach 5.5 percent in the medium term.
