ISLAMABAD: The International Monetary Fund (IMF) projects that inflation in Pakistan will remain in the single digits at 5.6% for the current fiscal year, ARY News reported.
According to IMF, the average inflation rate for the fiscal year 2025-26 is expected to be around 7.7%. The IMF further forecasts that over the next six years, Pakistan’s average inflation will continue to stay in the single-digit range.
For the fiscal year 2026-27, the IMF estimates an average inflation rate of 6.5%, with the same rate projected for 2027-28 and 2028-29. The IMF also anticipates that inflation this fiscal year will remain below the government’s target.
In contrast, historical data from the IMF indicates that Pakistan’s average inflation was significantly higher in previous years, recording 23.4% in 2023-24 and 29.2% in 2022-23. For the first ten months of the current fiscal year, the average inflation rate has been reported at 4.73%, according to the IMF report.
The budget talks between Pakistan and the IMF remained inconclusive last week, primarily due to disagreements over the relief measures proposed by Prime Minister Shehbaz Sharif’s government, sources said.
The IMF raised objections to government proposals, particularly on additional power subsidies to domestic consumers.
Read More: IMF to continue budget talks with Pakistan as staff visit concludes
It also dismissed the government’s plan to reduce electricity tariffs for industrial users, and demanded timely tariff hikes during the next fiscal year.
IMF emphasized the need to implement a comprehensive plan to eliminate circular debt in FY2026. This includes negotiations with Independent Power Producers (IPPs) to reduce the debt by Rs348 billion.
During the talks, the Federal Board of Revenue (FBR) requested revision of its revenue target of Rs14.307 trillion. The IMF reportedly showed some flexibility, considering a revised target in the range of Rs14.05 trillion to Rs14.1 trillion.
However, the Fund raised concerns over Pakistan’s fiscal discipline, noting that while the FBR is reluctant to increase tax targets, government expenditures continue to rise.
The IMF warned that if spending exceeds the fixed limit, Pakistan will miss its primary balance surplus target – an essential condition of the current IMF loan program.
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