Pakistan's benchmark stock index fell 2% on Friday, dragged by concerns of tax hikes after the country's government announced a date for the annual budget.

Pakistan will present its annual budget later than expected on June 12, a statement from parliament said on Thursday, the second postponement this week.

The budget would come ahead of Islamabad seeking a new loan from the International Monetary Fund in view of last month's advance discussions about a long and longer Extended Fund Facility.

Meanwhile, Pakistan's central bank is widely expected to cut its key interest rate next week by 100 basis points after holding it at a record 22% for seven straight policy meetings, according to a Reuters poll of market watchers.

Analysts believe the market is reacting to reports of higher taxes, in order to meet revenue measures pushed for by the IMF.

"Given the market has almost doubled over the past year with some names providing multifold returns, investors would rather book capital gains at a 15% tax rate before June 30, than the proposed and speculated marginal tax rate which could be up to 45% in the highest bracket," said Adnan Sheikh, Assistant Vice President of Research at Pak Kuwait Investment company.

The KSE 100 index is up 12% year to date, and 72% in the last 12 months. (Reporting by Ariba Shahid; Writing by Sakshi Dayal; Editing by Clarence Fernandez and Varun H K)