• Decision follows inconclusive discussions with lender, to avoid conflict with Eid holidays
• IMF spokesperson rejects Indian claims regarding misuse of funds by Pakistan
• President meets IMF delegation, praises it for supporting Islamabad’s economic stability
ISLAMABAD: The government on Friday postponed the announcement of the federal budget 2025-26 by more than a week to June 10 amid inconclusive discussions with the International Monetary Fund (IMF) on some of the critical fiscal measures and to avoid the Eid break during the budget session.
Informed sources said the visiting IMF staff mission had multiple rounds of discussion on Friday, including a wrap-up session with Finance Minister Muhammad Aurangzeb.
The minister’s adviser, Khurram Schehzad, confirmed that the federal budget for the next year will be presented on June 10, and the Pakistan Economic Survey 2024-25 will be released on June 9. Earlier, the budget announcement was set for June 2.
Planning Minister Ahsan Iqbal told Dawn that discussions with the IMF had just concluded, and it was thought that the budget announcement should be made soon after Eid holidays to ensure continuity of the budget session.
Sources said there was also a view that it would be difficult for the government to recollect a sufficient number of members of parliament from their hometowns for the budget debate if the budget was announced before Eid which is likely to fall on June 7.
Therefore, the budget announcement would be immediately followed by a comprehensive debate in the house and enable standing committees on finance to read through budget proposals and give their input before its passage by the two houses, well before June 30.
Also, Prime Minister Shehbaz Sharif was leaving for a whirlwind visit to Turkiye, Azerbaijan, Iran, and some other friendly countries in Central Asia and the Middle East, and would be unable to personally indulge in budgetary settings. He would be back from abroad on May 29.
As a consequence, the meeting of the Annual Plan Coordination Committee (APCC) for finalisation of federal and provincial development plans set for Monday (May 26) has also been postponed to a fresh date to be set later.
Sources said the recent sudden announcement of national tariff policy envisaging a drastic cut in customs tariffs from 19 to 9.5 per cent on raw materials and semi-finished items for a few industries, besides the removal of additional customs duties, had also created a lot of concern among the relevant industrial sector.
The five-year tariff policy approved for inclusion in budget inclusion in the budget this year by the prime minister himself compelled the powerful industries to launch a counter campaign.
Coupled with this, the defence allocations for next year had a reasonable budgetary impact, which could not be settled with the IMF staff before the wrap-up meeting with the finance minister, although discussions between FBR’s top brass and the staff mission continued until evening.
Sources said the engagements with the IMF would now continue virtually over the next week till finalisation of the defence budget, and as a result, the revenue side of the equation and other estimates under the budget, including the federal public sector development programme that was now estimated at Rs1tr. Staff-level discussions on the next budget began on May 14.
Sources said there is no plan the to increase the rate of petroleum levy in the near future, except for a separate imposition of carbon levy on a number of items, starting with about Rs3 per litre and going up to Rs5 in second year to meet a requirement of Climate Resilience Support Fund (RSF).
The sources said the relief measures for the salaried class, real estate, and expenditure control measures had been discussed with the IMF staff, but this would remain subject to an alternative resource envelope to be presented by the authorities, as fiscal consolidation would remain one of the central themes of the next year’s budget.
India’s objections
As the talks with IMF staff concluded, the Fund’s spokesperson at its headquarters in Washington rubbished Indian concerns about recent approval by its executive board of $1.4bn in additional RSF support besides disbursement of $1bn second tranche of the $7bn Extended Fund Facility (EFF).
“The [IMF executive] board approved the disbursement after finding that Pakistan had met all performance targets and made progress on structural reforms”, said IMF spokesperson Julie Kozack at a regular news briefing, adding that the loan programme for Islamabad was only for stabilisation of foreign exchange reserves and not related to the budget financing.
An Indian journalist asked the spokesperson about the recent bailout package by the IMF to Pakistan, saying “the Indian government has expressed a lot of displeasure with Pakistan planning to use this package to build — rebuild — areas that allegedly support cross-border terrorism.”
Another journalist asked about the implications of the escalation between Pakistan and India on both economies, while another questioned what “safeguards the IMF has that its funds won’t be used for military or in support of military actions.”.
In response to the questions, Ms Kozack said the IMF’s Executive Board approved Pakistan’s EFF programme in September of 2024.
“The first review at that time was planned for the first quarter of 2025. And consistent with that timeline, on March 25, 2025, the IMF Staff and the Pakistani authorities reached a staff-level agreement on the first review for the EFF,” she said.
She added that the agreement was then presented to the IMF’s executive board, which completed the review on May 9. “As a result of the completion of that review, Pakistan received the disbursement at that time,” she said.
Ms Kozack explained that the global money lender had a standard procedure in place under its programmes, which allowed its executive board to conduct periodic reviews of lending programs to assess countries’ progress. The board, she said, particularly looked at whether the programme was on track, whether the conditions under the programme were met, and whether any policy changes were needed to bring the programme back on track.
She then said that Pakistan’s programme was approved after the country successfully met all of the required targets. Regarding the question on safeguards, she clarified that IMF financing was provided to members for the purpose of resolving balance of payments problems, therefore, in the case of Pakistan, all the disbursements received under the EFF were allocated to the reserves of the central bank.
“So, those disbursements are at the central bank, and under the programme, those resources are not part of budget financing. They are not transferred to the government to support the budget,” she said.
Zardari meets IMF delegation
President Asif Ali Zardari on Friday said that the IMF programme had played a supportive role in stabilising Pakistan’s economy, according to the APP.
The president, in a meeting with an IMF delegation led by the director of the Middle East and Central Asia Department, Jihad Azour, highlighted the lender’s positive role in promoting economic development in developing nations.
He also acknowledged and appreciated the IMF’s contribution to Pakistan’s economic progress.
The delegation expressed satisfaction over Pakistan’s efforts for economic reforms and implementation of the IMF programme, which they observed was progressing in the right direction.
Mr Zardari thanked the IMF for its support and cooperation with Pakistan and also appreciated the finance ministry for its efforts to improve the national economy.
Published in Dawn, May 24th, 2025
