Negotiations between Pakistan and the International Monetary Fund (IMF) are continuing for the preparation of the federal budget for the new fiscal year 2026-27, with development spending, fiscal transparency and procurement reforms among the key areas under discussion.
According to documents, the government has acknowledged its limited financial capacity for launching new development projects and has assured the IMF that priority will be given to already ongoing schemes.
During the talks, a proposal was discussed to allocate less than 10% of development funds for new projects in the upcoming budget.
The government informed the IMF that due to restricted fiscal space, the main focus will remain on completing previously approved and ongoing development projects rather than starting a large number of new schemes.
IMF seeks clearer budget reporting
The IMF has stressed that budget reports should clearly include reasons for under-spending or over-spending.
According to the documents, the budget-making process will be made more transparent, and comparable data of expenditures and estimates will be prepared to improve financial monitoring.
The IMF has also directed Pakistan to bring bank accounts and funds of government institutions under one centralized system.
Documents show that balances of more than Rs150 billion, currently deposited in accounts of various government departments, will become part of the central system.
In this regard, 70 more government accounts have been added to the Single Treasury Account.
Environment to be prioritised
According to the documents, environmental considerations will be given greater importance in the selection of development projects.
This means future development planning will increasingly take into account environmental impact, sustainability and long-term public interest.
The government has decided to make the public procurement process more transparent through e-PADs.
Preparations are also underway to amend laws to end special concessions in government contracts. Under the proposed reforms, details of actual ownership of contracts worth more than Rs50 million will have to be released.
Online procurement system
An online system for government procurement will be implemented at both federal and provincial levels. According to the documents, a target has been set to connect all federal institutions to e-PADs by the end of 2026.
A new system has also been introduced to monitor financial risks linked to public-private partnership projects. Documents show that potential financial liabilities of federal and provincial projects have reached Rs472 billion, making risk monitoring a key part of the budget and fiscal reform process.
