IMF has concluded its latest mission to Pakistan after securing commitments from Islamabad to maintain strict fiscal discipline and achieve a primary budget surplus target of 2% of gross domestic product in fiscal year 2027-28.

The IMF delegation, led by advisor Iva Petrova, visited Islamabad from May 13 to May 20 for talks with officials from the finance ministry and the State Bank of Pakistan.

The discussions focused on economic developments, reforms under IMF supported programmes and preparations for Pakistan’s upcoming FY2027 budget.

In a statement released on Wednesday, the IMF said Pakistan’s authorities had committed to maintaining prudent fiscal and monetary policies despite economic risks linked to the ongoing conflict in the Middle East.

The lender said the State Bank of Pakistan would maintain an “appropriately tight monetary policy stance” to control inflation and monitor the impact of rising energy prices on the broader economy.

The IMF also stressed the importance of exchange rate flexibility, saying it should continue to act as a “key shock absorber” while Pakistan deepens its foreign exchange interbank market.

Pakistan remains under a $7 billion IMF programme approved last year. Earlier this month, the Fund cleared the country to access nearly $1.32 billion in additional financing after completing programme reviews.

Reforms and Budget Talks Continue

The IMF said discussions also covered reforms in the energy sector, state owned enterprises, product market liberalisation and financial sector restructuring aimed at attracting private investment and supporting long term economic growth.

Officials also reviewed progress under the Resilience and Sustainability Facility programme, including disaster risk financing reforms, climate related budget planning and electricity subsidy reforms.

“The mission thanks the federal and provincial authorities for their constructive engagement, strong collaboration, and continued commitment to sound policies,” the IMF said.

The lender confirmed that discussions on Pakistan’s FY2027 budget would continue in the coming days. Another IMF mission, expected in the second half of 2026, will conduct Article IV consultations and further reviews under the Extended Fund Facility and Resilience and Sustainability Facility.

IMF Sees Economic Stability Improving

Last week, the IMF said Pakistan had made “significant progress” under its reform programme despite regional instability and global economic uncertainty.

“Pakistan’s policy efforts under the EFF arrangement have delivered significant progress in stabilising the economy and rebuilding confidence amid a challenging global environment, including the ongoing Middle East war,” the Fund said in a separate report.

The IMF noted that Pakistan’s fiscal performance remained strong and projected a primary surplus of 1.6% of GDP for FY2026 in line with programme targets.

The lender said inflation had increased because higher global commodity prices pushed up domestic energy costs. However, it added that Pakistan’s growth momentum improved during the first half of the fiscal year while the current account remained broadly balanced.

According to the IMF, Pakistan’s foreign exchange reserves rose to nearly $16 billion by December 2025 compared with $14.5 billion earlier in the year.

The Fund said total disbursements under Pakistan’s IMF programmes now stand at around $4.8 billion.