The International Monetary Fund (IMF) has conditionally agreed to provide some relief to the salaried class in the upcoming federal budget for the fiscal year 2025-26.

Speaking on SAMAA TV’s programme Red Line with Talat, economic analyst Shahbaz Rana revealed that while the government has limited fiscal space, Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb are cognizant of the burden on the salaried segment and are looking to ease it.

“The IMF says you can give relief to the salaried class, but then you must generate that revenue from other areas — and one of the suggestions includes taxing pensioners,” Rana said, adding that such a move remains politically and socially sensitive.

He noted that the salaried class has already contributed Rs437 billion in income tax over the past 10 months. The upcoming budget is likely to propose a 10 per cent salary increase for public servants along with some form of tax relief, although specifics remain under discussion.

Meanwhile, the IMF has not expressed any reservations regarding Pakistan’s defence budget. “The Fund is not concerned about how much you spend on defence — it only wants to ensure where the money to cover it will come from,” Rana said.

He suggested that reducing the current policy interest rate from 11pc to 9pc could help the government meet its defence requirements more efficiently.

According to the analyst, Pakistan is negotiating with the IMF under stringent terms, with nearly 50 conditions tied to the new loan programme. Several of these relate directly to budgetary decisions and structural reforms.

Among the more controversial IMF demands is the formulation of an alternative strategy for the banking system should Pakistan proceed with efforts to abolish the interest-based financial system, in line with a recent Federal Shariat Court verdict.