Islamabad, March 27, 2026: The International Monetary Fund has shared the draft of the Memorandum of Economic and Financial Policies (MEFP) with Pakistani authorities after finalizing key contours of the 2026–27 federal budget, while urging more frequent adjustments in fuel prices to reflect global market trends.
Pakistan and the IMF have exchanged draft documents as part of efforts to reach a staff-level agreement for the third review under the $7 billion Extended Fund Facility (EFF), alongside the release of the fourth tranche and additional financing of $1.4 billion under the Resilience and Sustainability Facility (RSF).
The Fund has sought clarity on the government’s fiscal framework for the upcoming budget, including a proposed tax collection target of Rs15.08 trillion for the Federal Board of Revenue. Meanwhile, the tax target for the მიმდინარე fiscal year has been revised downward to Rs13.4 trillion from the earlier estimate of Rs13.79 trillion.
A key recommendation by the IMF is the need for faster readjustments in petroleum, oil, and lubricant (POL) prices. While Pakistan has already shifted from fortnightly to weekly fuel price reviews, the Fund is pushing for even more frequent revisions, potentially on a bi-weekly or daily basis. Discussions between both sides are ongoing to determine a feasible mechanism.
Separately, the Pakistan Institute of Development Economics has warned that the ongoing Middle East conflict could trigger significant economic repercussions for Pakistan. In a recent policy study, PIDE described the crisis as a global economic shock with implications for trade, energy security, and external stability.
The report estimates that Pakistan’s exports to Gulf Cooperation Council (GCC) countries could decline by $1.5–$2 billion if disruptions persist in the Strait of Hormuz. At the same time, rising global oil prices may increase the country’s import bill by an additional $4.5 billion.
Highlighting structural vulnerabilities, the study noted that over 81 percent of Pakistan’s energy imports pass through the Strait of Hormuz. Escalating oil prices, freight costs, and shipping risks could widen the trade deficit from $24 billion to $41.8 billion and push inflation from 7.1 percent to 11.1 percent, posing further challenges to export competitiveness and the balance of payments.
