• Country exceeds first-quarter revenue target despite economic pressures
• Plan to replace power subsidies with targeted BISP support reviewed
ISLAMABAD: Robust revenue collection and preparedness to shift electricity subsidies entirely to the Benazir Income Support Programme (BISP) mechanism have placed Pakistan on a positive trajectory in ongoing talks with the International Monetary Fund (IMF).
An IMF mission led by Iva Petrova concluded discussions on Wednesday with Federal Board of Revenue (FBR) authorities. Informed sources said the talks highlighted that Pakistan surpassed its first-quarter revenue target by a reasonable margin, despite a challenging external environment.
Another session with BISP authorities reviewed progress on the committed increase in cash transfers by about 25pc. It also discussed transitioning power sector subsidies from current consumer tariffs to targeted BISP scorecard disbursements by January 2027.
Further clarifications from the power division for eliminating the electricity tariff subsidy are expected in the days ahead.
An IMF structural benchmark requires this major policy reform by early 2027 to replace the cross-subsidy system with a targeted framework for low-income consumers.
The World Bank is assisting the government in linking power consumers to a national socioeconomic registry, with validity checks to determine eligibility criteria expected by late November.
The IMF is also pushing for the prime minister’s fuel subsidy to be operated through the BISP. The government has already committed to protecting the most vulnerable from food and fuel price volatility by improving the coverage and capacity of BISP’s unconditional cash transfer to Rs18,000.
Before the IMF executive board meets to process the $1.2bn disbursement and grant waivers for end-June 2026 slippages, the government may need to finalise a few procedural steps.
Meanwhile, sources indicate the State Bank of Pakistan may pursue monetary tightening to minimise the second-round impact of the US-Iran conflict on energy prices.
Inflation measured by the consumer price index exceeded 11pc in August and was expected to conclude between 10pc and 11pc in September. The central bank kept its policy rate unchanged at 11.5 per cent earlier this month.
The Ministry of Finance said on Wednesday that a higher import bill driven by global oil prices remains a key challenge, notwithstanding macroeconomic stabilisation during the first two months of the 2027 fiscal year.
“Elevated global oil prices remain the principal risk to this outlook, through their effect on purchasing power, input costs and the import bill,” the ministry said in its monthly economic update.
Manufacturing activity strengthened, supported by higher vehicle production and increased domestic cement dispatches. Early agriculture indicators were also positive.
“Together, these developments indicate that the recovery is gradually becoming more broad-based, supporting production, trade, transport and other associated services,” the ministry said.
The external sector recorded encouraging progress, with strong workers’ remittances and continued growth in IT exports helping narrow the current account deficit.
Fiscal performance also remained supportive, with tax collection broadly aligned with targets and recent data showing a primary surplus. The government said these developments reflected gradual progress towards fiscal and external stability while supporting economic activity.
Published in Dawn, October 1st, 2026
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