The International Monetary Fund (IMF) will begin virtual discussions about Pakistan’s upcoming budget Wednesday (today) as the visit of his Islamabad mission has been delayed due to security concerns in the region, government sources told Express Pakinomist on Tuesday.

The virtual conversations take place as the global lender has appointed a new mission manager as Pakistan. According to sources, the IMF mission delayed its planned arrival at Islamabad on Tuesday due to uncertainty caused by Indian aggression affecting air travel throughout the region.

However, the sources added that the mission is now expected to travel to Islamabad over the weekend, subject to the security situation. They emphasized that the adjustment would not have a negative impact on the work or the original program plan.

Negotiations will begin on May 14 (today) and continue until May 16. “Virtual discussions are expected to be held. For the second and final part of the negotiations, the IMF team is expected to arrive at Islamabad on Saturday and stay until May 23,” the source said.

The IMF’s resident representative of Pakistan Mahir Binici did not respond to a request for comment on the change in the itinerary. The Ministry of Finance spokesman Qumar Abbasi also did not answer questions about the change in the travel plans.

Meanwhile, IVA appointed Petrova, an employee of Bulgarian origin, as new mission manager for Pakistan. She would participate in the discussions along with the outgoing mission manager Nathan Porter – who served in the position for an extended period.

Porter was known for its firm attitude towards political issues, but was reluctant to public interactions. He also kept a tight control over the Ministry of Finance’s media policy. Mahir did not comment on whether both outgoing and new mission managers would participate in both lecture rounds.

Petrova, who has a Ph.D. -Grad in economics from Michigan State University, has served as IMF mission manager for Armenia. Previously, she had served with the missions to Israel, Iceland and Latvia.

Pakistan’s government plans to reveal the budget for the financial year 2025-26 on June 2nd Eidul Azha holidays. This will be Finance Minister Muhammad Aurangzeb’s second budget speech, which must be in line with the parameters that the IMF will make during these conversations.

Fiscal policy is expected to remain tight in the next financial year. The IMF has asked Pakistan to give a budget on the assumption of having 1.6% of the GDP primer budget surplus, which requires to generate approx. RS2 trillion in addition to the non-interest expenses.

The tax target of the Federal Board of Revenue (FBR) is proposed to be 11% of GDP or RS14.3 trillion. The IMF would investigate whether the government plans to take credible realistic measures to support the new tax target, the sources said.

The size of the federal budget still remains tentatively due to doing defense needs, and the government plans to advertise less than the RS18 trillion budget. The total target for budget deficit after incorporating large provincial cash surplus is expected at 5.1% of GDP or RS6.7 trillion, they said.

According to the sources, the first day of negotiations, the Ministry of Finance would use the IMF mission during the July-Marts period in the current financial year. It will also share details of supplementary grants approved in the financial year.

The IMF has established several tax matters whose successful completion has so far helped to evenly continue the program despite initial setbacks. Pakistan has met the IMF targets for a primary budget surplus of the federal government as well as net income collection and cash surplus targets from the four provinces.

Against a primary surplus target of RS2.7 trillion, the federal government reported a surplus of RS3.5 trillion or 2.8% of GDP. This higher surplus was primarily due to booking the annual central bank’s profit in the first quarter, with the entire estimated profit of RS2.5 trillion already accounted for.

The four provinces generated a total cash profit of RS1.028 trillion during the first nine months, exceeding the IMF target with RS25 billion. The Federating units also generated RS685 billion in tax revenue and surpassed the IMF target with RS79 billion. But against a nine-month revenue target of over RS9.2 trillion, FBR, RS8.5 trillion, and fell below the target of RS715 billion.

The IMF has also asked the government to give an update on any savings from the planned degradation of the government. The next financial year’s goal, which is not Tax, will also be discussed during the first day of the negotiations, mainly the prospects of Petroleum Levy collection and Central Bank surplus.

FBR will give an update on the tax performance in April and the chances of the rest of this financial year. The tax shortage has ballooned to a staggering RS830 billion in the first 10 months of the financial year, despite the fact that the government is introducing additional taxes and reducing refund.

Only in April did the government add to RS135 billion in tax shortages, violating the obligation to the IMF that the deficit against the original annual target will not be more than the RS640 billion.

FBR has so far collected RS9.3 trillion in taxes in late April. Although the collection was about 27% or RS1.95 trillion higher than the previous fiscal year, but still it is not enough to stay on the field.

The sources said the discussions on the first day will also take place about the so -called enforcement measures in the areas of tracks and traces, retailers and compliance risk steering. FBR has miserably failed in all these areas, and its collection is largely driven by the extra tax measures.