The International Monetary Fund (IMF) has shared the Memorandum of Economic and Financial Policies (MEFP) with Pakistani authorities, outlining the framework for the 2026-27 budget. This development follows the finalization of key budgetary outlines, with the IMF emphasizing the need for more frequent oil price revisions.
Pakistan and the International Monetary Fund have exchanged drafts of the MEFP to reach a staff-level agreement for the third review and the release of the fourth tranche under the $7 billion Extended Fund Facility (EFF) and $1.4 billion under the Resilience and Sustainability Facility (RSF). The IMF has requested a comprehensive budgetary and fiscal framework, setting the Federal Board of Revenue (FBR)’s tax collection target at Rs15.08 trillion for the upcoming fiscal year. This marks an adjustment from the current fiscal year’s target, which was revised downward to Rs13.4 trillion by June 2026.
The International Monetary Fund has urged Islamabad to adjust petroleum, oil, and lubricant (POL) prices more frequently, shifting from the current weekly adjustments to potentially more frequent changes. This request aims to reflect international market fluctuations more accurately. Pakistani authorities are in negotiations to determine the appropriate frequency for these adjustments.
Adding to the economic pressures, a study by the Pakistan Institute of Development Economics (Pide) has highlighted the global economic shock resulting from the ongoing Middle East crisis. This situation poses significant risks to Pakistan’s trade, energy security, and external sector stability. The study warns that disruptions in the Strait of Hormuz could lead to a decline in exports to GCC countries by $1.5 to $2 billion, with energy imports also facing sharp declines.
The analysis further predicts that rising international oil prices could increase Pakistan’s import bill by $4.5 billion, exacerbating the current account deficit and straining foreign reserves. Pide’s report underscores the structural vulnerabilities in Pakistan’s economy, with 81.6% of energy imports passing through the Strait of Hormuz, exposing the nation to severe supply shocks.
Looking ahead, if global oil prices were to rise from $80 to $160 per barrel, Pakistan’s trade deficit could expand significantly, and inflation could surge, affecting economic stability. The study also highlights potential spillover effects, such as increased freight costs and disrupted shipping routes, which could weaken Pakistan’s export competitiveness, particularly in the textile sector, a major component of its export economy.
Published in SouthAsianDesk, March 28, 2026
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