Pakistan and the International Monetary Fund (IMF) are set to resume talks virtually on Monday to discuss key aspects of the 2025–26 fiscal budget, with a major focus on the gas sector’s circular debt crisis.

According to government sources, Pakistani officials will present a five-year plan to eliminate the Rs 2,800 billion circular debt in the gas sector. The IMF has asked for detailed financial data, including profit and loss statements, cash flow, and balance sheets of gas companies.

The IMF has raised concerns about unsustainable subsidies and the fiscal burden. It reportedly objected to proposed relief measures such as lower electricity tariffs for industrial users and additional power subsidies for households.

The Federal Board of Revenue (FBR) has expressed resistance to increasing tax targets, while government spending continues to rise. The IMF has warned that overspending could jeopardize Pakistan’s ability to meet its primary balance surplus — a key condition of the loan agreement.

Despite optimism from the Pakistani side, disagreements during the initial talks have heightened concerns about potentially strict IMF demands, which may lead to new taxes in the upcoming budget.