Islamabad:
The International Monetary Fund (IMF) returned to Washington on Saturday without officially concluded discussions, saying that talks would continue in the coming days in order to “agree on the budget”, in a press release that shows gaps between the two parties.
“We will continue discussions to welcome ourselves to the budget for the 2026 authorities in the coming days,” said Nathan Porter, outgoing chief of mission in Pakistan, in a statement published after the end of the 10 -day talks held on the contours of the new budget.
Porter said that discussions focused on actions aimed at improving income, including strengthening compliance and widening the tax base and prioritizing expenses. “
The IMF’s mission was to arrive in Pakistan from May 13 to May 23, but due to India-Pakistan tensions, she held the first series of talks in Turkyie. Face-to-face discussions started on May 19 from Islamabad but did not conclude themselves within the pre-aggressive period.
The IMF said that his staff visit focused on recent economic developments, the implementation of the program and the budgetary strategy for the 2026.
Government sources have said that there was a broader understanding of the primordial objective of the next budget surplus of the financial year; However, there were gaps in understanding the two parties, in particular on the Modus Operandi to achieve the objective.
Porter said that the authorities concerned had reaffirmed their commitment to budgetary consolidation while protecting social and priority expenses, aimed at a primary surplus of 1.6% of GDP during the 20126 financial year.
At the expected size of the economy of next year, the surplus will be equal to nearly Rs 2.1 Billions, which is slightly lower than the Ministry of Finance said last week.
Interestingly, the IMF said that on the basis of the preliminary conclusions of this mission, the IMF staff will prepare a report which, subject to the approval of the Management, will be presented to the IMF board of directors for discussion and decision.
Government sources have indicated that no consensus had been achieved during the tax objective of the next financial year, certain income measures and alleviation in certain sectors. They declared that the objective would depend on the expenses of the expenses for the three main budget leaders.
There were also gaps on the relief points for the salaried class, the real estate sector and the taxation of pensions, the sources said.
Last week, Prime Minister Shehbaz Sharif qualified the proposed repair of the salaried class by the FBR as insufficient and rather asked the tax machine to guarantee more repairs. Senior negotiators of the FBR and the Ministry of Finance said that the quantum of the relief of the employee class was not yet decided.
The sources said that the IMF has asked Pakistan to offer alternative measures to relieve the salaried class. The fund has suggested imposing taxes on high -end retirees and using money to provide relief to the salaried class.
However, the state of the IMF to link the relief of the salaried class with other measures which, in fact, is a reversal of the injustice made to it in the last budget, was not justified.
The salaried class has already paid 437 billion in income tax, compared to less than 4 million rupees by traders.
The IMF declaration on the expansion of the tax base seems cosmetic, because it did nothing against the government’s failure to collect taxes due to retailers.
The sources said that the government’s point of view on the taxation of retirees was that it would be a politically difficult decision to tax high -end retirees.
The government is again inclined to relieve the immobilization sector, in particular the reduction of transaction taxes, which do not comply with the IMF policy for the sector. The IMF had already agreed to abolish federal excise rights, said FBR president Rashid Langrial last month.
Nathan said that the IMF “had held constructive discussions with the authorities on their budgetary proposals for the 2026 financial year and their broader economic policy, and the agenda of the reform supported by the Funds Extended 2024 (EFF) and the 2025 resilience and durability center (RSF)”.
Porter said that discussions also covered reforms in the current energy sector aimed at improving financial viability and reducing the high cost structure in the Pakistan power sector as well as other structural reforms that will help promote sustainable growth and promote a higher playground for businesses and investments.
The sources indicated that the IMF had not agreed from the electricity division to allocate almost 1% of the energy grants of the GDP and agreed to give Rs1.04 Billions.
The government has already delayed the budget for more than a week until June 10 after it could not solve all the problems timely before approving the summary to announce the budget on June 2.
Porter said that Pakistan has also stressed their commitment to ensure healthy development of macroeconomic policies and construction pads. “In this context, the maintenance of an appropriate monetary policy dependent on data remains a priority to guarantee that inflation is anchored in the medium -term target beach of the central bank of 5 to 7%,” said Porter.
Porter reiterated its previous declaration and stressed that “the reconstruction of exchange reserve pads, preserving a fully functional FX market and allowing greater exchange rate flexibility are essential to strengthen resilience with external shocks”.
Despite the IMF program, Pakistan is unable to recover in the main foreign loans due to a bad credit rating.
Porter said that the IMF team will remain initiated and will continue their close dialogue with the authorities and the next mission associated with the next EFF and RSF journals is expected in the second half of 2025.
