BeNewz
Related Articles
IMF concludes $8.4bn review discussions with Pakistan without a staff-level agreement; further talks expected in Washington as Islamabad faces fiscal and governance reform demands.
Aftab Maken
ISLAMABAD: The International Monetary Fund (IMF) has concluded its review mission with Pakistan without announcing a staff-level agreement (SLA) under the $8.4 billion combined Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), though both sides described the discussions as “smooth” and said progress had been made toward resolving pending issues.
The IMF team, led by mission chief Iva Petrova, completed its visit on October 8, 2025, following two weeks of policy consultations in Karachi and Islamabad. While no formal end-of-mission statement was released — an uncommon departure from IMF practice — Pakistani officials said the remaining gaps could be bridged in the coming days during the World Bank–IMF annual meetings in Washington. Finance Minister Muhammad Aurangzeb is expected to lead the Pakistani delegation, which will include the finance secretary, the State Bank of Pakistan (SBP) governor, and the Federal Board of Revenue (FBR) chairman.
According to officials familiar with the discussions, Islamabad has been asked to provide verified estimates of flood-related losses and ensure that provincial governments absorb these costs from their own budgets without undermining cash surplus commitments to the federal government. For the current fiscal year, Punjab is expected to contribute a surplus of Rs740 billion, followed by Sindh at Rs370 billion, Khyber Pakhtunkhwa at Rs220 billion, and Balochistan at Rs185 billion.
Despite the absence of an SLA, official sources said there was no immediate pressure to impose new tax measures. The IMF, however, may revisit revenue projections after the release of first-quarter GDP data later in December. Should a shortfall emerge, additional fiscal steps — possibly including tax rate adjustments — could be implemented from January 1, 2026, as part of the biannual review process.
Sources said the IMF mission did not hold a formal wrap-up meeting with the finance minister before departure, though both sides met with Prime Minister Shehbaz Sharif. The prime minister has recently discussed program flexibility with IMF Managing Director Kristalina Georgieva, particularly in the context of Pakistan’s flood recovery needs.
The IMF mission’s silence following the talks contrasts with earlier reports that indicated “significant progress” had been made on both the EFF and RSF reviews. In its earlier statement, Ms. Petrova said that program implementation “remains strong and broadly aligned with the authorities’ commitments,” citing progress in fiscal consolidation, monetary discipline, and structural reforms.
The IMF’s key concerns remain consistent: ensuring sustainable fiscal policy, maintaining a tight monetary stance to contain inflation, restoring the financial viability of the energy sector, and advancing reforms in governance and transparency. Pakistan has faced recurring challenges in these areas, particularly in managing the power sector’s circular debt, which continues to strain public finances and erode investor confidence.
The Fund also urged Islamabad to sustain progress under the Resilience and Sustainability Facility — a newer component of Pakistan’s IMF engagement — aimed at building climate resilience and financing green infrastructure. The RSF, introduced alongside the $7 billion Extended Fund Facility first approved in 2023, is designed to help climate-vulnerable economies like Pakistan cope with environmental shocks and disaster recovery costs.
In a parallel development, the Pakistani government on Wednesday issued draft amendments to the Sharing of Assets of Civil Servants Rules, 2023, to comply with IMF-mandated governance reforms. Under the proposed rules, all civil servants in Grade 17 and above — across federal, provincial, and local governments, as well as state-owned enterprises — must electronically declare their assets and income through the FBR for public accountability.
However, the new regulations exempt serving members of the armed forces and individuals covered under the National Accountability Ordinance, 1999. The FBR has invited public comments on the draft within seven days to meet the IMF’s compliance timeline. According to the framework, banks will facilitate secure electronic submissions and ensure confidentiality through designated compliance officers.
While these governance reforms aim to enhance transparency, they also underscore the IMF’s broader demand for systemic reform in Pakistan’s public administration — a condition repeatedly highlighted in previous reviews. Analysts note that implementing such measures has often faced bureaucratic resistance, but compliance remains critical for securing continued IMF support.
Economists view the IMF’s latest stance as cautiously optimistic. The Fund acknowledged improvements in Pakistan’s fiscal discipline, foreign exchange reserves, and inflation control, but it remains concerned about the sustainability of reforms and potential political challenges ahead. The next few weeks, they say, will be crucial in determining whether Islamabad can finalize an SLA before year-end.
The upcoming Washington meetings could serve as the final venue for Pakistan to resolve pending technical details — including fiscal data verification, provincial financing commitments, and energy sector adjustments — that have so far delayed the agreement.
Despite the delay, markets reacted with relative calm, reflecting investor expectations that an SLA is still likely before December. Analysts suggest that a successful review would unlock the next tranche of IMF funds, stabilizing Pakistan’s external financing outlook and encouraging further support from multilateral partners and international creditors.
The IMF mission concluded its stay by expressing appreciation for Pakistan’s cooperation and extending sympathies to those affected by recent flooding. While an agreement remains pending, the Fund’s acknowledgment of “strong program implementation” signals confidence in Pakistan’s near-term policy direction.
As Islamabad prepares for the Washington round of talks, the stakes remain high: securing the IMF’s approval is essential not only for the next disbursement but also for maintaining macroeconomic stability, restoring investor confidence, and sustaining reform momentum in the face of mounting fiscal and climate challenges.
In the words of one senior official, “We’re close — but not done yet.” For Pakistan, closing that last mile may define the trajectory of its economic recovery heading into 2026.
IMF says significant progress made in talks with Pakistan on $8.4bn facility reviews
The International Monetary Fund (IMF) announced on October 8, 2025, that it had made “significant progress” with Pakistan toward reaching a staff-level agreement (SLA) under the ongoing $8.4 billion financing programs, following a two-week mission that concluded in Islamabad and Karachi.
The IMF delegation, led by Iva Petrova, visited Pakistan from September 24 to October 8, 2025, to conduct discussions for the second review under the 37-month Extended Fund Facility (EFF) and the first review under the 28-month Resilience and Sustainability Facility (RSF).
At the conclusion of the mission, Ms. Petrova issued an end-of-mission statement emphasizing that Pakistan’s economic program implementation remained strong and largely aligned with the government’s reform commitments to the IMF. She stated that “significant progress was made in several areas,” adding that both sides would continue working to finalize any outstanding policy issues before a formal SLA is reached.
According to the IMF statement, the discussions covered a broad range of macroeconomic and structural reform areas critical to Pakistan’s economic stabilization and recovery. These included fiscal consolidation, monetary policy management, energy sector reforms, and improvements in governance and transparency.
The IMF mission noted that Pakistan had sustained efforts to strengthen public finances through fiscal consolidation while still providing essential recovery support for flood-affected communities. It praised the authorities’ commitment to balancing fiscal discipline with targeted social spending and investment in climate resilience.
On monetary policy, the IMF underscored the importance of maintaining an appropriately tight and data-driven approach to ensure inflation remains within the State Bank of Pakistan’s (SBP) target range. Inflation control remains a key IMF priority given persistent global and domestic price pressures that have challenged Pakistan’s monetary stability in recent years.
The statement also highlighted the need to restore the viability of Pakistan’s energy sector, one of the country’s most pressing fiscal and structural challenges. The IMF called for continued implementation of regular tariff adjustments and cost-cutting reforms to address inefficiencies, reduce the accumulation of circular debt, and promote sustainable energy pricing mechanisms.
In addition to fiscal and energy sector measures, the IMF stressed the importance of advancing structural reforms aimed at reducing the state’s economic footprint, promoting private sector competition, and improving overall governance and transparency. The mission encouraged Islamabad to continue liberalizing commodity markets to foster a more market-driven and competitive business environment.
The Fund also acknowledged productive discussions on Pakistan’s climate resilience agenda, which forms a core part of the Resilience and Sustainability Facility (RSF) framework. The RSF, which complements the EFF program, supports countries vulnerable to climate change by integrating environmental sustainability and disaster preparedness into their economic strategies.
Ms. Petrova noted that the IMF and Pakistani authorities had reviewed progress on implementing reform measures under the RSF, including steps to strengthen disaster management systems, improve green infrastructure financing, and enhance climate governance frameworks.
While the IMF did not announce an immediate staff-level agreement, the Fund confirmed that both sides would continue policy discussions “with a view to settling any outstanding issues.” A finalized SLA, once reached, would allow Pakistan to access the next tranche of funding pending approval by the IMF Executive Board.
The IMF mission also expressed sympathy for communities affected by Pakistan’s recent flooding, acknowledging the human and economic toll of recurrent climate-related disasters. “The IMF team wants to express its sympathy to those affected by the recent floods and is grateful to the Pakistani authorities, private sector, and development partners for many fruitful discussions and their hospitality throughout this mission,” the statement read.
The IMF’s positive tone reflects cautious optimism over Pakistan’s progress in stabilizing its economy after a period of high inflation, external pressure, and fiscal strain. Analysts say that achieving a staff-level agreement in the coming weeks will be critical for Pakistan to unlock additional financing, bolster reserves, and maintain investor confidence ahead of 2026.
The Extended Fund Facility, originally approved in 2023, aims to restore macroeconomic stability and support structural reforms in Pakistan’s economy, while the newer Resilience and Sustainability Facility helps the country strengthen climate adaptation and sustainability measures. Together, the two programs form the cornerstone of Pakistan’s engagement with the IMF amid ongoing efforts to ensure fiscal discipline, control inflation, and safeguard economic growth.
With discussions expected to continue in the coming days, the IMF’s acknowledgment of Pakistan’s “strong program implementation” and commitment to reform suggests that a formal agreement may be within reach — a key milestone for the country’s path toward economic stability and long-term resilience.
