Pakistan has reported stronger-than-expected revenue collection during ongoing IMF talks, while the government prepares to shift electricity subsidies to the Benazir Income Support Programme (BISP).

An IMF mission led by Iva Petrova completed discussions with Federal Board of Revenue (FBR) officials on Wednesday.

Officials said Pakistan exceeded its first-quarter revenue target by a reasonable margin. They said the result came despite difficult external conditions.

The IMF mission also held talks with BISP officials. The meeting reviewed plans to increase cash transfers by about 25 per cent.

Electricity subsidies face major reform

The government plans to shift electricity subsidies from consumer tariffs to targeted payments through BISP by January 2027.

The move forms part of an IMF structural benchmark. It aims to replace the existing cross-subsidy system with targeted support for low-income households.

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The Power Division is expected to provide further details on the removal of electricity tariff subsidies in the coming days.

The World Bank is helping Pakistan connect electricity consumers with the national socioeconomic registry. Officials expect to complete eligibility checks by late November.

The system will use socioeconomic data to identify households eligible for targeted assistance.

Fuel subsidy also under review

The IMF is also pressing Pakistan to route the prime minister’s fuel subsidy through BISP.

The government has committed to protecting vulnerable households from food and fuel price increases. It plans to expand the coverage and capacity of BISP’s unconditional cash transfer programme to Rs18,000.

Pakistan may need to complete several procedural steps before the IMF executive board considers a $1.2 billion disbursement.

The board will also consider waivers linked to missed targets for the end of June 2026.

Inflation and oil prices remain risks

The State Bank of Pakistan may tighten monetary policy to contain the wider impact of higher energy prices, according to sources.

Consumer inflation rose above 11 per cent in August. Officials expected inflation to remain between 10 and 11 per cent in September.

The central bank kept its policy rate at 11.5 per cent earlier this month.

The Ministry of Finance said higher global oil prices remained a major challenge for the economy.

In its monthly economic update, the ministry said expensive oil could affect household purchasing power, production costs and the import bill.

Economic activity shows signs of recovery

The ministry also reported stronger manufacturing activity during the first two months of the 2027 fiscal year.

Vehicle production increased, while domestic cement dispatches also rose.

Early indicators from the agriculture sector showed positive trends.

The ministry said these developments suggested that the economic recovery was becoming broader. It said stronger activity was supporting production, trade and transport services.

Pakistan’s external sector also showed improvement. Strong workers’ remittances and higher IT exports helped reduce pressure on the current account.

Fiscal performance remained supportive as well. Tax collection stayed broadly in line with government targets.

Recent figures also showed a primary budget surplus.

The government said the developments pointed to gradual progress towards fiscal and external stability while economic activity continued to recover.