Pakistan has assured the International Monetary Fund that it will continue passing global fuel price changes to consumers while expanding targeted relief measures to protect vulnerable segments of society.
Under commitments outlined in the government’s policy framework, authorities said fuel pricing will remain market-linked, with direct subsidies limited to low-income groups rather than across-the-board price controls.
As part of this approach, the government plans to increase financial support under the Benazir Income Support Programme (BISP). The monthly stipend under the Kafaalat program is set to rise from Rs. 14,500 to Rs. 19,500 starting January 2027, alongside an expansion in the program’s coverage.
Officials also informed the IMF that the planned Federal Excise Duty (FED) on fertilizers and pesticides will be delayed. The decision reflects concerns over rising input costs for farmers and the potential impact on agricultural output amid global market volatility.
To manage the economic impact of rising energy prices, the government has already introduced temporary fiscal measures. These include the creation of a Prime Minister’s Austerity Fund, a Rs. 100 billion cut in development spending, and savings of around Rs. 27 billion through reduced fuel allowances and non-essential expenditures.
Authorities emphasized that such relief measures are short-term, while regular fuel price adjustments will continue as part of broader economic management.
In addition, the government plans to expand social protection by adding around 200,000 more households to BISP by the end of fiscal year 2026, bringing total beneficiaries to about 10.2 million families.
Conditional cash transfer programs covering education, health, and nutrition are also set to grow, including expansions in initiatives like Taleemi and Nashonuma, along with the introduction of a new skills-based program.
To improve transparency and efficiency, the government is upgrading payment systems through the introduction of digital wallets for around 7 million households, with full rollout expected by the end of fiscal year 2026 in coordination with the State Bank of Pakistan.
Officials say these steps are aimed at balancing economic reforms with social protection, particularly as global uncertainties continue to affect fuel and food prices.
