Islamabad (Commerce Desk) — The International Monetary Fund (IMF) has urged Pakistan to limit petroleum subsidies, end expensive fuel schemes, and accelerate reforms in the energy sector. The Fund also stressed the need to maintain a cautious monetary policy to control inflation.
According to a statement, Pakistan’s economic growth rate stood at 4% between July 2025 and March 2026. However, due to the effects of the Middle East crisis, it is expected to decline to 3.6%.
Inflation reached its highest level in May 2026, while remittances from overseas Pakistanis helped keep the current account deficit under control.
The IMF has proposed gradually phasing out subsidies on petroleum products and restricting their benefits to deserving individuals rather than the general public.
According to the Fund, financial assistance during periods of rising oil prices should be targeted and limited in duration. It also advised against further expanding expensive and widely available fuel subsidies.
The statement also emphasised improving the recovery of outstanding payments in the energy sector, reducing gas losses, and taking measures to lower production costs. The IMF described timely adjustments to energy prices and reforms to reduce expenditure as essential.
According to the International Monetary Fund, the State Bank should maintain a sufficiently tight monetary policy to control inflation, while Pakistan must also take measures to increase its foreign exchange reserves.