Pakistan’s Budget 2025-26 Delayed Amid IMF Disagreements Over Subsidy Allocations

Islamabad: The federal government has postponed the presentation of Pakistan’s Budget 2025–26 from June 2 to June 10, the Finance Ministry announced Monday. The delay is due to unresolved issues with the International Monetary Fund (IMF), particularly around subsidy allocations.

During a meeting of the National Assembly’s Sub-Committee on Commerce, chaired by Khurshid Ahmed Junejo, Joint Secretary Corporate Finance Sajjad Azhar revealed that Pakistan, under the IMF’s Extended Fund Facility (EFF), cannot make unilateral changes to budgeted subsidies. This restriction has led to continued negotiations with the IMF and delayed finalization of the budget.

Read: Govt eyes relief for construction, real estate in budget talks with IMF

The meeting also brought attention to the Trading Corporation of Pakistan’s (TCP) pending receivables, which stand at approximately Rs 317.5 billion — including Rs 93.7 billion in principal and Rs 223.8 billion in accrued markup. A heated exchange ensued between Sajjad Azhar and TCP Chairman Syed Rafeo Bashir Shah, who emphasized that wheat and urea were distributed per ECC directives and blamed the Finance Ministry for payment delays dating back to 2010.

Azhar argued that ECC approvals did not include covering markup costs through the federal budget. While the Finance Ministry has sought relief by involving the State Bank of Pakistan (SBP), the central bank clarified it cannot intervene in commercial contracts.

Committee members recommended increasing subsidy allocations to address part of TCP’s dues. Azhar also noted that the Finance Ministry recently secured commercial loans for PIA at market rates and may pursue similar options to manage circular debt, with borrowing pegged at KIBOR minus 0.2%.

Further commitments include Rs 26 billion pledged by the Punjab government, to be matched by the federal government in FY 2025–26. An additional Rs 15 billion will be disbursed this fiscal year for the Utility Stores Corporation and National Fertilizer Marketing Limited, with Rs 30 billion added to next year’s budget.

NFML confirmed it has cleared all markup payments for 2023–24.

The committee agreed to release Rs 90 billion in verified dues to TCP initially and formulate a plan to resolve the markup issue in a second phase. TCP will also conduct a special audit of its commercial loans to identify inconsistencies.

Lawmakers Shaista Pervaiz Malik and Rana Atif urged a swift resolution of the financial backlog and expressed concern over the ongoing subsidy dispute.