IMF Pakistan bailout: The International Monetary Fund (IMF) said on Saturday that it had “constructive discussions” with Pakistani officials about the country’s upcoming budget. Talks are expected to continue in the coming days as both sides work toward an agreement on economic policies and reforms.
Budget talks still ongoing

The IMF team arrived in Islamabad on May 19 to begin talks with the Pakistani government on the national budget for the financial year 2025–26. However, after several days of high-level meetings, no final agreement was reached. As a result, the government has delayed presenting the budget until June 10.

Nathan Porter, the IMF’s mission chief, said in a statement that the discussions included budget plans and broader economic goals supported by the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). He added, “We will continue discussions toward agreeing over the FY26 budget over the coming days.”

The IMF also said that Pakistan cannot use IMF bailout funds to support its government budget. “Any deviation from these conditions will impact the PAK bailout programme,” adds IMF.

Focus on revenue and reforms
According to the IMF, the talks focused on steps to increase government revenue by improving tax collection and expanding the tax base. The Pakistani government also promised to continue working toward reducing spending, while still protecting social welfare and key development projects.

The goal is to achieve a primary budget surplus of 1.6% of GDP in the next financial year. In addition, reforms in the energy sector were also discussed, especially ways to make the power sector more financially stable and affordable.

Macroeconomic stability a priority

The IMF emphasised that Pakistan needs to maintain tight monetary policy to control inflation, aiming to keep it within the State Bank’s medium-term target range of 5–7%. Porter said the country should also work to rebuild its foreign exchange reserves and allow more flexibility in the currency exchange rate to handle external economic shocks.

The next IMF mission related to the ongoing loan programs is expected in the second half of 2025.

India raises concerns over IMF aid to Pakistan

Pakistan signed a $7 billion loan agreement with the IMF last year and has already received two payments under the program. However, India has expressed concern over the use of these funds. On May 16, Indian Defence Minister Rajnath Singh urged the IMF to reconsider its support, warning that Pakistan could misuse the money to fund cross-border terrorism.

Despite these concerns, the IMF board has continued to approve financial assistance for Pakistan.