Pakistan-IMF talks extended amid proposal to raise petrol levy
- By Shoaib Nizami -
- May 20, 2026
ISLAMABAD: Pakistan and the International Monetary Fund (IMF) are likely to extend ongoing budget negotiations by another two days as discussions continue over key fiscal targets, with the proposed increase in petroleum levy emerging as one of the most critical points under review.
According to sources, the IMF has recommended an 18 percent increase in the petroleum levy target, raising the possibility that the levy could reach Rs100 per litre in the next fiscal year as part of efforts to boost government revenues.
The IMF mission, currently in Pakistan for budget consultations, was originally scheduled to conclude talks today. However, officials said the visit is likely to be extended as negotiations continue on a few unresolved matters, although consensus has reportedly been reached on most major issues.
Sources said the IMF is also seeking stronger fiscal commitments from the provinces, including an additional Rs430 billion in revenue collection and a combined provincial surplus of nearly Rs2 trillion to support federal budgetary goals.
For the next fiscal year, the Federal Board of Revenue has reportedly set a tax collection target of Rs15.264 trillion, with a mid-year target of Rs7.022 trillion by December 2026. The government is also planning to generate Rs95 billion through expanded tax audits.
Additional revenue measures under discussion include raising Rs50 billion from the sugar, cement, tobacco and fertiliser sectors.
Meanwhile, the defence budget is expected to rise from Rs2.564 trillion to Rs2.665 trillion, while the federal development programme is likely to receive Rs986 billion.
Also Read: IMF ‘urges’ provinces to raise additional Rs400 billion in budget 2026-27
Provincial development allocations may increase from Rs2.1 trillion to Rs2.5 trillion, while debt servicing costs are projected to climb to Rs7.8 trillion in the upcoming fiscal year.
Sources further said a provisional agreement has been reached to increase payments under the Benazir Income Support Programme from Rs14,500 to Rs18,000.
However, the IMF has reportedly maintained its condition of allowing gas and electricity tariff adjustments twice a year, keeping pressure on utility consumers as Pakistan works to secure the financial framework for the next budget.