The International Monetary Fund has called on Pakistan to immediately end its costly, broad fuel support scheme and restrict subsidies to those in need, according to its statement on economic review talks with the country.
The statement said that following the staff-level agreement, Pakistan’s access to $1.21 billion remains subject to approval by the IMF Executive Board.
The IMF praised Pakistan’s efforts to achieve its economic targets. It said the programme had helped bring economic stability and accelerate reforms.
According to the statement, Pakistan recorded economic growth of 4% during the July–March period ending in 2026. However, the Middle East crisis affected growth, bringing the rate down to 3.6%. Inflation reached its highest level in May 2026, while remittances helped contain the current account deficit.
The Fund called for the petrol subsidy scheme to be phased out, saying it should not be expanded further and assistance should be limited to those in need. The statement also urged the immediate withdrawal of the costly, broad fuel support scheme.
If oil prices rise, the IMF said fuel assistance should remain limited, targeted and available only for a specified period.
The statement called for progress on energy reforms, better recovery of outstanding dues and measures to reduce production costs. It also emphasised improving collections and reducing losses in the gas sector.
The IMF urged the State Bank of Pakistan to maintain an appropriately tight monetary policy in light of inflation. It also called for Pakistan to build its foreign exchange reserves, describing timely energy tariff adjustments and cost-reducing reforms as essential.
