ISLAMABAD: Negotiations continue between Pakistan and the International Monetary Fund over the country’s federal budget for fiscal year 2026-27. Talks are focused on development spending, fiscal transparency and procurement reforms, according to government documents.
The government told the IMF that it has limited financial capacity for new development projects, according to reports.
Priority will be given to ongoing projects. One proposal suggests allocating less than 10% of development funds to new projects in the upcoming budget.
Focus on existing projects:
Officials explained that fiscal constraints require the government to concentrate on completing active projects rather than launching many new initiatives.
The IMF emphasized that budget reports must clearly show any under-spending or over-spending.
Documents show that the budget-making process will become more transparent, with comparable expenditure and estimate data to improve financial monitoring.
Centralizing government funds:
The IMF has also instructed Pakistan to consolidate bank accounts and funds of government institutions into a single centralized system.
Over 150 billion rupees (about $540 million) currently held in various departmental accounts will be moved to the central system.
Additionally, 70 more government accounts have been added to the single treasury account.
Environmental considerations:
Future development projects will increasingly account for environmental impact, sustainability, and long-term public benefit. This approach aims to make project planning more responsible and forward-looking.
Reforming public procurement:
The government plans to make public procurement more transparent through an electronic system called "e-PADs".
Laws will be amended to remove special concessions in government contracts. Under the reforms, details of ownership for contracts worth more than 50 million rupees (about $180,000) must be disclosed.
Officials aim to connect all federal institutions to e-PADs by the end of 2026. The system will also be implemented at provincial levels.
A new system will monitor financial risks in public-private partnership projects.Federal and provincial projects currently face potential liabilities of 472 billion rupees (about $1.7 billion). Tracking these risks is now a key part of budget and fiscal reform efforts.
