IMF review finds Pakistan’s economic programme ‘on track’

ISLAMABAD: The International Monetary Fund (IMF) and Pakistani authorities have made “significant progress” toward reaching a crucial Staff Level Agreement (SLA), following two weeks of discussions in Islamabad and Karachi.

The positive tone of the Fund’s End-of-Mission Statement reflected confidence in Pakistan’s reform drive, noting that the country’s economic programme remains on track with strong implementation across key areas.

Focus on reforms and stability

The IMF mission, led by Iva Petrova, visited Pakistan from September 24 to October 8 to review progress under the Extended Fund Facility (EFF) and the new Resilience and Sustainability Facility (RSF). In her concluding remarks, Petrova said the authorities’ reform efforts were “strong and broadly aligned with commitments.”

The talks covered multiple areas critical to Pakistan’s economic recovery. On fiscal matters, both sides agreed that Pakistan had made progress in sustaining fiscal consolidation and improving public finances while continuing to support communities still recovering from devastating floods.

In terms of monetary policy, the Fund noted that inflation is gradually moving within the State Bank’s target range, supported by what it described as an “appropriately tight and data-driven” stance.

Energy sector and structural reforms

Petrova said “significant steps” had been taken to stabilise the energy sector, including regular tariff adjustments and cost-cutting measures aimed at improving its financial health.

The mission also acknowledged advances in structural reforms, including efforts to strengthen transparency, promote a more competitive business environment, and reduce the state’s role in commercial sectors. Progress was also made on policies to liberalise commodity markets and encourage private investment.

Building resilience against climate challenges

Another key area of focus was climate resilience, with discussions held under the RSF framework to help Pakistan manage environmental vulnerabilities and strengthen long-term sustainability.

The IMF team and Pakistani officials are expected to continue policy discussions to finalise any outstanding matters before signing the SLA, which will pave the way for the next disbursement of funds. This tranche is expected to bolster Pakistan’s foreign reserves and provide a much-needed boost to economic stability.

Petrova also extended condolences to those affected by recent floods and thanked the Pakistani authorities and private sector for their cooperation and hospitality.

Optimism from finance minister

A day earlier, the IMF shared the draft Memorandum of Economic and Financial Policies (MEFP) with Pakistan’s Ministry of Finance. Finance Minister Muhammad Aurangzeb, speaking informally with reporters, said that Pakistan had met all performance targets set by the Fund.

“The discussions are on track, and consensus has been achieved on all major targets,” Aurangzeb said, expressing hope that once the MEFP is signed, both sides will move quickly to formalise the staff-level agreement.

He reaffirmed that Pakistan remains fully committed to the IMF-supported programme and will continue to implement the agreed reforms to strengthen economic resilience.

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