Pakistan is facing fresh pressure from the International Monetary Fund (IMF) to withdraw subsidies on petroleum products and limit financial support to the energy sector as discussions continue over preparations for the upcoming federal budget.

Sources familiar with the ongoing virtual consultations said IMF officials have urged the government not to continue fuel subsidies in the next fiscal plan. The lender also emphasized reducing electricity sector support and ensuring that price adjustments recommended by regulators are implemented without delay.

According to officials, the IMF wants authorities to strictly follow tariff revisions proposed by energy regulators, which could translate into higher fuel and electricity prices if adopted.

Fiscal reforms remain a central focus of the negotiations. The IMF has advised Pakistan to raise its tax-to-GDP ratio by at least one percent through broader tax collection, expansion of the tax net, and a reduction in sector-specific tax exemptions.

The government has also been encouraged to further curb non-development expenditures as part of efforts to stabilize public finances and contain the fiscal deficit.

Talks between Pakistan and the IMF are ongoing, particularly on taxation measures and overall budget targets, though final figures for revenue collection and spending have yet to be finalized.