Pakistan, IMF Finalise Broad FY27 Macroeconomic Framework Targets

Pakistan and the IMF have broadly agreed on the FY27 macroeconomic framework, targeting 4.1% GDP growth, 8.6% inflation, and stronger provincial tax enforcement measures.

Pakistan and the International Monetary Fund (IMF) have broadly agreed on the macroeconomic framework for FY2026-27, with the Ministry of Finance projecting real GDP growth of 4.1% and average inflation of 8.6% in the upcoming federal budget.

According to The News International and Geo News, the IMF has proposed a primary surplus target of 2% of GDP, equivalent to approximately ₨2.9 trillion, as part of ongoing fiscal consolidation efforts under Pakistan’s economic reform programme.

Sources said Pakistan proposed a 4.1% growth target against the IMF’s projection of 3.5% for FY27, while inflation estimates also remained under discussion. Officials noted that higher fuel prices during the first half of FY27 were a key factor behind the government’s inflation projections.

“The IMF has already set a primary balance target of 2% of GDP, equivalent to Rs2.9 trillion, for the next budget,” the report stated.

Independent economists warned that inflation could average around 11%, increasing the possibility of further monetary tightening by the State Bank of Pakistan.

Under the proposed framework, Pakistan’s current account deficit is projected at around $4 billion, remaining below 1% of GDP. Exports are expected to reach $35 billion, imports $70 billion, and workers’ remittances approximately $42 billion during FY27.

The upcoming budget will also include provincial revenue targets aimed at increasing the tax-to-GDP ratio by an additional 0.3 percentage points, equivalent to ₨400 billion. Provinces are expected to generate additional revenue primarily through stricter enforcement of GST on services and implementation of new agricultural income tax measures.

Finance Minister Muhammad Aurangzeb held a virtual meeting with provincial finance ministers and economic teams, urging provinces to introduce additional revenue measures worth ₨400 billion to support the agreed fiscal targets.

According to officials, provinces have agreed not to introduce policies that could undermine commitments made under the IMF programme and will consult the IMF through the federal finance ministry before implementing any measures affecting programme targets.

The IMF also asked provinces to improve automation of agricultural income tax systems, utilise data-sharing arrangements with the Federal Board of Revenue, and allocate additional human and IT resources for enforcement.