Pakistan has assured the International Monetary Fund that it will pass on global oil price changes to consumers while introducing targeted subsidies to protect vulnerable groups and delaying new taxes on agricultural inputs.
According to commitments outlined in the government’s policy framework, the Government of Pakistan will continue adjusting fuel prices in line with international trends, while using targeted relief measures to cushion the impact on low-income households.
As part of its social protection strategy, the government plans to expand support under the Benazir Income Support Programme (BISP). The monthly stipend under the Kafaalat program is set to increase from Rs. 14,500 to Rs. 19,500 starting January 2027, alongside broader program expansion.
Authorities also informed the IMF that the planned Federal Excise Duty (FED) on fertilizers and pesticides will be postponed. The decision reflects concerns over rising global commodity prices and the need to protect agricultural productivity and farmers facing higher input costs.
To manage fiscal pressure, the government has already introduced temporary measures, including the creation of a Prime Minister’s Austerity Fund, a Rs. 100 billion cut in the Public Sector Development Programme, and savings of around Rs. 27 billion through reductions in fuel allowances and non-salary expenditures.
Officials emphasized that these measures are short-term, with regular fuel price adjustments remaining a key tool for managing demand and maintaining fiscal balance.
The government also plans to expand BISP coverage by adding around 200,000 households by the end of FY2026, bringing total beneficiaries to approximately 10.2 million families. Conditional cash transfer programs focused on education, health, and nutrition are also set to grow, including expansions in Taleemi and Nashonuma initiatives, along with a new skills-based program.
In addition, authorities are working to modernize payment systems for beneficiaries. In coordination with the State Bank of Pakistan, digital wallets are being introduced for nearly 7 million households, with full rollout targeted by the end of fiscal year 2026.
Officials say the shift to digital payments will improve transparency, efficiency, and ease of access for millions of beneficiaries across the country.
