Pakistan has committed to passing on changes in global oil prices to consumers and expanding targeted social protection under its program with the International Monetary Fund, while delaying new taxes on farm inputs to cushion the impact of regional tensions on inflation and growth, according to officials familiar with the agreement.
Under commitments outlined in the government’s Memorandum of Economic and Financial Policies, Islamabad will increase cash transfers under the Benazir Income Support Programme (BISP) as part of efforts to protect low-income households from rising fuel and food costs linked to geopolitical instability in the Gulf region.
The monthly stipend under the flagship Kafaalat program will rise to 19,500 rupees from 14,500 rupees starting January 2027, following an expansion in program coverage and budget allocations planned in the fiscal year 2027 budget, the officials said.
Authorities also told the IMF they would postpone the planned imposition of federal excise duty on fertilizers and pesticides, citing volatility in global commodity markets and risks to agricultural output. The move reflects concerns over the sector’s strategic importance and uncertainty facing farmers amid rising input costs.
Pakistan has already introduced temporary fiscal measures to offset the impact of higher energy prices, including the creation of a Prime Minister’s Austerity Fund, a 100 billion-rupee reduction in the Public Sector Development Programme, and savings of about 27 billion rupees through cuts in fuel allowances and non-salary expenditures, officials said. The government emphasized that such measures would remain short term and that regular fuel price adjustments would continue to play a central role in managing demand.
To strengthen social protection, authorities plan to expand unconditional cash transfers by adding about 200,000 households to BISP by the end of fiscal year 2026, bringing total enrollment to roughly 10.2 million families. Enrollment in conditional cash transfer programs covering education, health and nutrition is also set to increase, including a planned expansion of the Taleemi and Nashonuma initiatives and the introduction of a new skills-focused program.
The government is also upgrading payment systems for beneficiaries, including the rollout of digital wallets for about 7 million households, with full coverage targeted by the end of fiscal year 2026.
