The International Monetary Fund (IMF) is set to wrap up its latest round of discussions on Pakistan’s 2025-26 federal budget today, though virtual negotiations are expected to continue after the budget speech, according to top sources.

Officials say all IMF conditions will be fulfilled before the Finance Bill 2025 is enacted. However, a major sticking point remains the IMF’s demand that any relief for the salaried class must be matched by corresponding cuts in government expenditures.

The Ministry of Finance has signaled that there will be no increase in salaries or pensions in the upcoming budget, reflecting the government’s commitment to fiscal discipline.

The IMF has also raised concerns about providing substantial relief to the export sector, linking the next tax collection target to a parallel reduction in state spending. Sources reveal that the government has requested a delay in raising the duty on fertilizer from 5 percent to 10 percent and in imposing a new 5 percent tax on pesticides.

Despite the overall focus on budgetary restraint, defense spending is expected to rise, with recent events underscoring the perceived need for increased allocations.

The IMF has also urged provincial governments to tighten their belts and ramp up revenue generation efforts as part of the broader fiscal consolidation strategy.