The International Monetary Fund (IMF) returned to Washington on Saturday to formally end discussions and said that negotiations would continue in the coming days to “agree on the budget” in a statement showing gaps between the two pages.

“We will continue with the discussions of agreeing on the authorities’ financial year 2026 budget in the coming days,” said Nathan Porter, the trooping mission manager to Pakistan, in a statement issued after the end of 10-day negotiations held on the contours of the new budget.

Porter said the discussions focused on actions to improve revenue – including by strengthening compliance and expanding the tax base – and prioritizing expenses. “

The IMF mission was scheduled to arrive in Pakistan on May 13 until May 23, but due to India-Pakistan tension, it held the first round of negotiations from Turkyia. The discussions face to face began on May 19 from Islamabad, but did not end within the previous time frame.

The IMF said its staff visits were focused on recent financial development, program implementation and the budget strategy for the financial year 2026.

The sources of government said there was a broader understanding of the next financial year’s overall goal of the primary budget surplus; However, there were gaps in the understanding of both sides, especially above Modus Operandi to reach the target.

Porter said the authorities concerned confirmed their commitment to fiscal consolidation, while protected social and prioritized expenses for a primary profit of 1.6% of GDP in FY2026.

At the expected size of the economy of the next financial year, the profits will be equal to almost RS2.1 trillion, which is slightly lower than what the Ministry of Finance said last week.

Interestingly, the IMF said that the IMF staff based on the preliminary conclusions of this mission will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.

The government sources said that there was still no agreement on the next financial year’s tax target, some income measures and relief to certain sectors. They said the goal would depend on the expenditure costs of the three major heads of the budget.

There were also gaps on the points to give relief to the employee class, the real estate sector and taxation of pensions, the sources said.

Last week, Prime Minister Shehbaz Sharif named the proposed relief for the grade of FBR as inadequate and instead asked the tax machinery to secure more relief. Senior FBR and the Ministry of Finance’s dealers said that the quantity of the grade -class was not yet decided.

The sources said the IMF asked Pakistan to suggest alternative measures to provide relief to that grade. The fund suggested introducing taxes on advanced retirees and spending the money to provide relief to that grade.

However, the IMF’s condition of associating relief to the grade with other measures that are actually a reversal of injustice made into the last budget was not justified.

That grade has already paid RS437 billion in income tax compared to less than RS4 million of the traders.

The IMF’s statement of expansion of the tax base seems cosmetic as it did nothing against the government’s failure to collect proper taxes from retailers.

The sources said the government’s perception of taxing the pensioners was that it would be a politically difficult decision to tax the high-end pensioners.

The government is again inclined to relieve relief to the real estate sector, especially reducing transaction taxes that do not comply with the IMF policy of the sector. The IMF already agreed to abolish the federal excise duty, said FBR chairman Rashid Langrial last month.

Nathan said the IMF “held constructive discussions with the authorities in their financial year 2026 budget proposals and broader economic policy and reform agenda supported by 2024 Extended Fund Facility (EFF) and 2025 Resilience and Sustainability Facility (RSF)”.

Porter said that discussions also included the ongoing reforms of the energy sector aimed at improving economic viability and reducing the high -price structure in Pakistan’s electricity sector as well as other structural reforms that will help promote sustainable growth and promote a more level of playing field for business and investment.

The sources said the IMF did not accept the power department to sell almost 1% of GDP power subsidies and agreed to give RS1.04 trillion.

The government has already delayed the budget by over a week to June 10, after it could not sort out all the questions in a timely manner before they approved the summary to announce the budget on June 2nd.

Porter said Pakistan also emphasized their commitment to secure sound macroeconomic policy and building buffers. “In this context, the maintenance of an appropriate tight and data-dependent monetary policy remains a priority for ensuring that inflation is rooted in the middle bank’s medium-term target area of ​​5-7%,” Porter said.

Porter reiterated its previous statement and emphasized that “rebuilding currency reserve buffers, preserved a fully functioning eg market and enables greater currency exchange flexibility to strengthen resilience to external shocks”.

Despite the IMF program this time, Pakistan is unable to obtain large foreign loans due to a bad credit rating.

Porter said the IMF team will remain engaged and continue its close dialogue with the authorities, and the next mission associated with the next EFF and RSF reviews is expected in the second half of 2025.