Pakistan Seeks IMF Flexibility to Ease Budget and Boost Growth as economic pressures continue, and GDP growth remains modest. The government aims to negotiate softer fiscal targets with Pakistan and request leniency under the IMF loan program. Prime Minister Shehbaz Sharif will discuss these points with the IMF Managing Director at the World Economic Forum in Davos.
The government plans to renegotiate conditions under the $7 billion Extended Fund Facility (EFF) and the $1.4 billion Resilience and Sustainability Facility (RSF). Officials hope this will provide room for the 2026-27 federal budget. Key focus areas include taxation and energy pricing, which impact industrial competitiveness and domestic investment. By easing these targets, Pakistan can stimulate economic growth and improve the investment-to-GDP ratio.
Foreign direct investment (FDI) in Pakistan has fallen by 43%, while the current account deficitin Pakistan reached $1.2 billion in the last half-year. The government may cut the policy rate to ease SME credit and boost investment. Petroleum levies and super tax thresholds are under review to keep the fiscal balance within IMF limits.
The Special Investment Facilitation Council is tasked with attracting both local and foreign investment. The government proposes export-led growth and lower electricity tariffs to boost competitiveness. Officials expect remittances to Pakistan to reach $42 billion by June 2026, providing additional support for economic stabilisation.
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Pakistan seeks IMF flexibility to ease budget and boost growth, improving fiscal targets and attracting foreign investment.
