ISLAMABAD — In a major fiscal development, Pakistan and the International Monetary Fund (IMF) have achieved a significant breakthrough during their ongoing virtual negotiations, paving the way for a substantial increase in the country’s development spending for the upcoming fiscal year.
According to reliable official sources, the IMF has formally accepted the federal government’s proposal to scale up its development budget from the previously estimated Rs1,126 billion to Rs1,326 billion. Consequently, the government has decided to expand the overall volume of the Public Sector Development Programme (PSDP) for FY2026–27 by injecting an additional Rs200 billion into development funding. Insiders revealed that the economic team successfully demonstrated the creation of the necessary fiscal space to accommodate this Rs200 billion expansion without violating overarching deficit targets. Under the newly revised PSDP framework, financial allocations for the Sindh province as well as federally funded Sustainable Development Goals (SDGs) initiatives have been significantly increased.
Simultaneously, crucial political negotiations have intensified between the ruling coalition and its key ally, the Pakistan People’s Party (PPP), regarding the strategic direction of the upcoming federal budget. Sources indicate that the government has committed to addressing and fulfilling the PPP’s primary legislative demands before the formal presentation in parliament.
As part of these ongoing consultations, a high-level PPP delegation—comprising senior leaders Naveed Qamar and Senator Sherry Rehman—held a pivotal meeting with Federal Minister for Planning, Development, and Special Initiatives Ahsan Iqbal to debate budget allocations. During the session, Minister Iqbal briefed the PPP leadership on proposed new mega-projects under the PSDP. The PPP delegation raised critical concerns regarding regional equity, allocation methodologies, and the historical utilization of development funds. Ahsan Iqbal assured the allied leadership that their grievances would be comprehensively redressed, with both sides scheduling a secondary round of consultations to finalize the policy framework.
Amid these fluid economic and political alignments, the government has officially decided against presenting the federal budget for FY2026–27 on its initial June 5 schedule. The formal budget announcement is now expected to be rescheduled to mid-June, with June 10 or June 12 emerging as the highly probable new dates, though a final executive decision is still pending.
In tandem with this delay, the high-profile session of the National Economic Council (NEC), originally slated for Wednesday, June 3, was also postponed. Official sources cited the upcoming regional elections in Gilgit-Baltistan as the primary catalyst for the scheduling adjustments. Furthermore, the extended timeline will allow the economic team to hold conclusive, fine-tuning talks with the IMF regarding the final development framework and other critical taxation measures, such as the proposed capital gains tax on cryptocurrency transactions.
