Web Desk — November 22, 2025
Islamabad: In a major step toward fiscal modernization, Pakistan’s government has reached an agreement with the International Monetary Fund on sweeping changes to tax policy, budget preparation, and public finance management for the upcoming 2026-27 federal budget.
Sources in the Ministry of Finance confirmed that the IMF’s technical mission, which concluded its visit on November 21, has provided a detailed report outlining 15 critical reforms to streamline budget implementation. The recommendations, aimed at curbing data discrepancies and enhancing transparency, include developing a fully digitized public finance management (PFM) plan, establishing a dedicated oversight committee for it, and mandating the use of e-office systems and e-PADs (electronic Pakistan Acquisition and Disposal System) for all budget drafting.
Further proposals emphasize eliminating inconsistencies in fiscal data through new evidence-based methodologies, expanding consultations with all ministries during budget formulation, and strengthening tax policy design to broaden the revenue base while reducing ad-hoc exemptions. The IMF team stressed integrating real-time data analytics to prevent revenue leakages and ensure equitable tax enforcement across sectors.
The Ministry of Finance will finalize these proposals and submit them to the IMF by mid-December, with a comprehensive technical report on budget proposals expected in January 2026. This aligns with Pakistan’s ongoing 37-month Extended Fund Facility (EFF), which prioritizes fiscal consolidation—targeting a primary surplus of 2.1% of GDP for FY2025-26—and structural reforms like the recent operationalization of a dedicated Tax Policy Office to separate policy from collection.
Officials described the accord as a “milestone for sustainable public finances,” noting it will support revenue targets of 1.5% of GDP increase in FY26 while protecting vulnerable sectors. As the IMF pushes for deeper tax equity, including harmonizing provincial agriculture income taxes effective January 1, 2025, the reforms could pave the way for smoother program reviews and bolster investor confidence amid easing inflation and policy rate cuts. Implementation timelines remain under close watch.
