An International Monetary Fund IMF review mission is expected to visit Pakistan in the last week of February to initiate discussions for the third review under the $7 billion Extended Fund Facility EFF and the release of a fourth tranche of $1 billion. Alongside this, negotiations will include the release of the second tranche under the Resilience and Sustainability Facility RSF. Preparatory work is already underway by the Ministry of Finance and the Federal Board of Revenue FBR ahead of the talks, with final dates for the mission yet to be formally confirmed.
The IMF review, which typically occurs in early March or September, will also play a crucial role in shaping the fiscal and budgetary framework for the 2026–27 federal budget. Sources indicate that the mission is tentatively expected to arrive in Karachi, where it will meet officials from the State Bank of Pakistan as well as representatives from the Overseas Investors Chamber of Commerce and Industry and the Pakistan Business Council on February 26 and 27. These discussions will likely influence policy measures aimed at promoting growth while balancing fiscal discipline.
The government plans to seek flexibility from the IMF in setting the fiscal framework to allow space for growth oriented measures, including easing the tax burden on salaried individuals and the formal manufacturing sector. The corporate sector has long raised concerns over high taxation, particularly the super tax, which has pushed effective rates for higher income brackets to between 55 and 60 percent. Following a Federal Constitutional Court ruling upholding the levy, industry groups have renewed calls for its gradual reduction. Additionally, businesses are advocating for a one percentage point cut in the corporate tax rate from 29 to 25 percent to enhance competitiveness and predictability.
Officials note that any relief for taxpayers and the formal sector will depend on the government’s ability to negotiate adjustments in the FBR’s tax collection targets with the IMF. Should the Fund require, alternative revenue measures may be implemented to offset potential reductions for salaried individuals and manufacturing entities. The outcome of the upcoming IMF mission is expected to be a decisive factor in shaping Pakistan’s fiscal strategy and budget priorities for the upcoming financial year, balancing economic growth with regulatory compliance and international obligations.
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