IMF Urges Pakistan to Bring Inflation Down to 5–7% as Budget Talks Conclude

ISLAMABAD:The International Monetary Fund (IMF) has concluded its latest round of talks with Pakistan, urging the country to curb inflation within the 5–7% target range, and focus on macroeconomic stability in the upcoming 2025–26 federal budget.

In a statement issued following the visit, the IMF confirmed that its mission had completed a detailed and “constructive” dialogue with Pakistani authorities. The focus of the discussions included fiscal targets, inflation control, and structural reforms necessary to ensure economic resilience.

The communiqué stated that **Pakistan’s primary budget surplus target has been set at 1.6%**, with emphasis placed on rebuilding foreign exchange reserves and ensuring exchange rate flexibility. The IMF acknowledged Pakistan’s confidence in carrying forward essential reforms and indicated that further discussions on the federal budget will continue in the coming days.

Key highlights from the IMF statement include:

* **Monetary Policy Tightening**: The State Bank of Pakistan (SBP) is advised to maintain a tighter monetary stance, with inflation as the central focus of its policy decisions.

* **Currency and Reserves**: Authorities have been urged to maintain stable foreign exchange reserves and allow the exchange rate to reflect market conditions to withstand external pressures.

* **Energy Sector and Growth Reforms**: Consultations also addressed strategies to reduce energy costs and accelerate economic growth through structural reforms. The IMF stressed the need for a stronger, longer-lasting policy framework to close existing economic gaps.

* **Fiscal Discipline**: IMF mission chief Nathan Porter emphasized increasing tax revenues in the upcoming fiscal year and called for a collaborative approach in determining spending priorities.

The IMF appreciated the cooperation from federal and provincial governments, acknowledging their efforts in maintaining economic policy discipline. The Fund praised Pakistan’s commitment to reforms and confirmed that discussions with the country would continue in a positive and forward-looking manner.

This round of negotiations is seen as critical as Pakistan prepares its next federal budget, and eyes a new medium-term loan arrangement with the IMF to stabilize its economy amid persistent fiscal and external challenges.