The International Monetary Fund (IMF) has tentatively agreed to offer some financial relief to Pakistan’s salaried class in the federal budget for the fiscal year 2025–26, though this comes with specific conditions.
During an appearance on SAMAA TV’s Red Line with Talat, economic expert Shahbaz Rana shared that despite limited financial flexibility, both Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb are mindful of the strain on salaried workers and are seeking ways to ease it.
Read more: Tax Relief for Salaried Class in Budget 2025-26 May Clash with IMF Demands
However, the IMF has stipulated that any relief provided must be offset by generating revenue from other sectors — with one controversial suggestion being the taxation of pensioners, which is seen as politically and socially delicate.
Rana pointed out that salaried individuals have already contributed Rs437 billion in income tax over the past 10 months. The government is expected to propose a 10% salary increase for public employees, along with potential tax concessions, though final decisions are still being made.
Regarding the defence budget, Rana noted that the IMF has not raised objections about Pakistan’s military spending. Its primary concern is ensuring the availability of funds to support such expenditures. He suggested that lowering the current interest rate from 11% to 9% could help the government manage its defence expenses more effectively.
He added that Pakistan is currently in talks with the IMF under tough conditions, with around 50 requirements attached to the next loan deal. Several of these conditions are directly related to fiscal policy and structural changes.
One of the more sensitive IMF demands involves creating a backup framework for the country’s banking sector if Pakistan moves forward with implementing the Federal Shariat Court’s ruling to eliminate interest-based banking.
