IMF to hold virtual talks on Pakistan's budget amid security concerns

The International Monetary Fund will on Wednesday hold virtual discussions on Pakistan's upcoming budget as the visit of its mission to Islamabad was delayed due to security concerns in the region.

The federal government is planning to unveil the budget for fiscal 2025-26 on June 2.

The International Monetary Fund (IMF) talks will continue until May 16.

The global lender has appointed a new mission chief to Pakistan and the mission is now expected to travel to Islamabad over the weekend, subject to the security situation, government sources told The Express Tribune on Tuesday.

The IMF mission delayed its scheduled arrival here on Tuesday due to uncertainty caused by the ongoing India-Pakistan conflict that has affected air travel across the region.

Virtual discussions are expected to be held from today. For the second and final leg of the talks, the IMF team is expected to arrive in Islamabad on Saturday and stay until May 23, the source said.

The IMF's Resident Representative to Pakistan Mahir Binici did not respond to a request for comment on the change in the travel plan.

Finance Ministry spokesperson Qumar Abbasi also did not respond to questions on the change in the travel plans.

Meanwhile, the IMF appointed Iva Petrova, a Bulgarian origin staff member, as new Mission Chief to Pakistan. She would join the discussions along with the outgoing Mission Chief Nathan Porter who served in the position for an extended term.

Binici also did not comment on whether both outgoing and new mission chiefs would join both rounds of talks.

Petrova, who holds a PhD degree in economics from the Michigan State University, has been serving as the IMF Mission Chief to Armenia. Previously, she had served with the missions to Israel, Iceland and Latvia.

In Pakistan, the fiscal policy is expected to remain tight in the next fiscal year too. The IMF has asked Pakistan to make a budget on the assumption of having 1.6 per cent of the GDP primary budget surplus, which will require generating about Rs 2 trillion over and above the non-interest expenses.

The tax target for the Federal Board of Revenue (FBR) is proposed to be 11 per cent of the GDP or Rs 14.3 trillion. The IMF would examine whether the government plans to take credibly realistic measures to back the new tax target, said the sources.

The IMF has set multiple fiscal conditions, whose successful completion has so far helped smooth continuation of the programme despite initial setbacks.

Pakistan has met the IMF targets for a primary budget surplus by the federal government, as well as net revenue collection and cash surplus targets by the four provinces.

Against a primary surplus target of Rs 2.7 trillion, the federal government reported a surplus of Rs 3.5 trillion, or 2.8 per cent of GDP.

The size of the federal budget still remains tentative due to redoing of defence needs and the government plans to announce less than Rs 18 trillion budget. The overall budget deficit target after incorporating large provincial cash surpluses is projected at 5.1 per cent of the GDP or Rs 6.7 trillion, the sources said.