Pakistan has assured the International Monetary Fund (IMF) that it will pass on international oil price increases to consumers while introducing targeted subsidy mechanisms to protect vulnerable segments of society, according to official sources cited in The News.
Authorities informed the IMF that amid heightened global volatility—driven in part by geopolitical tensions in the Gulf region—the government plans to adjust domestic fuel prices in line with international trends. At the same time, it is working on expanding social protection measures, particularly through the Benazir Income Support Programme (BISP).
Under proposed reforms, the monthly stipend for BISP beneficiaries is expected to rise from Rs14,500 to Rs19,500 starting January 2027. The government also plans to expand coverage by adding 200,000 households by the end of FY26, bringing total enrollment to approximately 10.2 million households. Digital payment systems, including e-wallets, are being implemented to improve transparency and efficiency in disbursement.
Officials further noted fiscal consolidation measures, including reductions in development spending and operational costs, alongside the establishment of an austerity fund. However, they emphasized that such measures are temporary, with fuel price adjustments remaining central to managing demand and macroeconomic stability.
Meanwhile, inflation has shown an upward trend, with the Consumer Price Index (CPI) rising to 7.3% in March 2026, breaching the State Bank of Pakistan’s target range. The increase has been largely attributed to higher transport, housing, and energy costs, exacerbated by global oil price movements and regional supply disruptions.
Analysts warn that continued volatility in global energy markets, coupled with potential disruptions to remittance flows from Gulf countries, could further strain Pakistan’s external account and inflation outlook in the coming months. The government has stated it is formulating strategies to mitigate these risks while maintaining supply stability and supporting economic activity.