Pakistan and the International Monetary Fund have agreed on a new set of economic targets extending through December 2026 and June 2027 under the country’s ongoing IMF program, with the Fund pressing for stricter fiscal controls, broader tax reforms, and continued energy sector adjustments.
According to IMF documents, the Federal Board of Revenue has continued to face tax collection shortfalls, prompting the Fund to propose granting FBR revenue targets the status of Quantitative Performance Criteria. The IMF has also called for approval of the FY2027 federal budget alongside new structural benchmarks aimed at expanding Pakistan’s tax base.
The IMF said implementation of the Revenue Administration Reforms Plan is already underway through the FBR Transformation Plan in priority sectors. Authorities have strengthened taxpayer audits using an upgraded Compliance Risk Management System, while digital invoicing is being expanded and is expected to become mandatory in the future.
Pakistan also plans to finalize a new audit manual and audit policy by August 2026, with taxpayer audit cases to be selected through a centralized system. The IMF expects the impact of these reforms to become more visible during FY2027.
The Fund further emphasized accelerating the Retailer Tax Registration Scheme and proposed restrictions on certain high-value transactions for non-filers. Pakistan is also working to make the Tax Policy Office fully operational by the end of May 2026, while future tax reforms are expected to be developed after consultations with stakeholders.
On the energy front, the IMF reiterated Pakistan’s commitment to maintaining financial sustainability in the power and gas sectors despite fluctuations in global oil prices. The government continues to implement automatic tariff adjustment mechanisms to align electricity and gas prices with actual costs. Since March 2026, Pakistan has also introduced a weekly fuel price adjustment mechanism for petroleum products.
Under the revised framework, Nepra’s annual rebasing exercise will shift from July to January, while Ogra will revise gas tariffs twice annually. The IMF noted that industrial electricity tariffs have been reduced, although fixed charges for residential consumers have increased. Lifeline consumers, however, will continue receiving exemptions from fuel adjustment charges and surcharges.
Pakistan has committed to limiting circular debt growth to Rs. 300 billion by FY2027 and reducing power sector subsidies from 0.7 percent of GDP to 0.6 percent. Privatization of power distribution companies and greater private sector participation in the energy sector are also continuing, although delays remain.
The IMF added that Pakistan’s first wholesale electricity auctions are expected by mid 2026 following the restructuring of the transmission network.
The IMF also highlighted external financing developments, stating that Pakistan has secured 12 months of financing assurances for its external financing program.
The Fund warned that rising tensions along the Pakistan-Afghanistan border and ongoing conflict in the Middle East could increase economic risks for Pakistan. It added that Pakistan’s debt repayment capacity remains heavily dependent on strict implementation of reform measures and the continuation of tight monetary policy to control inflation and strengthen foreign exchange reserves
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