IMF order: Will Pakistan end fuel and electricity subsidies in Budget 2026

The International Monetary Fund has asked Pakistan to discontinue subsidies on petroleum products and electricity during consultations on the 2026–27 federal budget. Officials said pricing adjustments proposed by regulators should be implemented without delay. Ongoing talks suggest major pricing and tax changes could shape the next financial year.

The lender has advised that fuel and electricity subsidies should not continue in the next fiscal year. It also urged immediate implementation of revised petroleum and power tariffs recommended by regulators.

According to the discussions, Pakistan has also been asked to reduce support for the power sector. The aim is to lower fiscal pressure and improve the country’s public finances.

The IMF has also stressed the need to expand Pakistan’s tax base. It has advised the government to increase the tax-to-GDP ratio by at least 1 percent and reduce tax exemptions given to different sectors.

Officials were also asked to cut non-development government spending. This step is being seen as part of wider efforts to control budget pressures in the coming year.

Talks between Pakistan and the IMF are still continuing on key fiscal targets. No final decision has yet been made on revenue goals or budget measures.

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The discussions are being closely watched because any change in subsidies can directly affect households and businesses. Fuel prices, electricity bills, and taxation could become major issues in the next budget.

The IMF appears focused on reducing financial pressure and strengthening revenue collection. That usually means the government may have less room for broad subsidies.

For ordinary people, the biggest concern will be the possible impact on daily living costs. Much will depend on the final budget decisions in the coming weeks.