Islamabad (Commerce Desk): The International Monetary Fund (IMF) has demanded that Pakistan achieve foreign exchange reserves of $18 billion by June and has made its approval of next fiscal year’s (2026-27) federal budget conditional on providing relief to salaried individuals, eliminating the super tax, and a possible 5% reduction in income tax on salaries.
Sources indicate that virtual negotiations are ongoing between Pakistan and the IMF regarding the third economic review. Officials from the Ministry of Finance briefed the IMF on the current economic situation and proposed tax measures in the new budget.
During the discussions, it was highlighted that ongoing tensions between the United States, Israel, and Iran have increased economic risks and uncertainty for Pakistan. Officials noted that recent increases in fuel prices could drive inflation higher, although remittances are expected to remain stable.
According to the Ministry of Finance, core inflation reached 7.6% in February 2026, and rising costs of food, fuel, and energy could push it further. The IMF’s approval will be mandatory for budget measures including relief for salaried individuals and the removal of the super tax.
