Pakistan and the International Monetary Fund have officially commenced discussions for the fourth review of a $7 billion loan facility and the third review of a separate $1.4 billion climate resilience programme. Islamabad is aiming to secure approximately $1.2 billion in fresh disbursements through these negotiations.
Finance Minister Muhammad Aurangzeb held an initial meeting with the IMF delegation headed by Iva Petrova, marking the formal start of the review process. The IMF team arrived in Islamabad on September 23 and has since engaged with officials from the State Bank of Pakistan, the finance ministry, the Federal Board of Revenue, the Establishment Division, as well as finance departments of Punjab and Khyber Pakhtunkhwa.
This review process evaluates Pakistan’s progress under the IMF’s Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). Successful completion could unlock about $1 billion from the EFF and roughly $200 million from the RSF, though these disbursements remain contingent on approval by the IMF’s executive board.
During the discussions, Aurangzeb updated the IMF team on recent macroeconomic indicators, enhancements in Pakistan’s credit rating, and improvements in the investment environment. Meanwhile, the talks are unfolding against a backdrop of pressure on Pakistan to meet revenue targets and implement overdue structural reforms under the IMF programme.
Key topics in the initial meetings included revenue collection challenges and the economic effects of regional conflicts. Disruptions related to these conflicts, along with rising fuel prices, have impacted both economic activity and tax revenues. Despite these pressures, the Federal Board of Revenue anticipates meeting its first-quarter tax collection target of 3.053 trillion rupees by the end of September.
One significant outstanding issue is the pending legislation on Pakistan’s sovereign wealth fund. The government missed a March deadline to amend the Sovereign Wealth Fund Act, which aims to enhance governance and safeguards for seven state-owned enterprises valued at around $8 billion. These enterprises include Oil and Gas Development Company Ltd, Pakistan Petroleum Ltd, Mari Petroleum, National Bank of Pakistan, Government Holdings, Pakistan Development Fund, and the Neelum-Jhelum Hydropower project. The amendments are currently awaiting parliamentary approval.
In a notable development, the government has advanced public procurement reforms ahead of the IMF review by issuing the new Public Procurement Rules 2026. These rules mandate the use of the E-Pak Acquisition and Disposal System for federal procurement and introduce provisions addressing competition, conflict of interest, blacklisting, and grievance mechanisms. The IMF had previously expressed concerns about preferential treatment of state-owned enterprises through rules allowing direct contracting under specific conditions.
The IMF is expected to evaluate Pakistan’s progress on tax reforms, fiscal consolidation, management of state-owned enterprises, the energy sector, and other structural reforms agreed under the programme. The government aims to demonstrate continued adherence to the IMF framework despite economic challenges stemming from regional instability.
Pakistan has previously obtained waivers for some missed targets and sought flexibility regarding reforms impacted by factors beyond its control. The current Extended Fund Facility, approved in September 2024, is a 37-month programme valued at about $7 billion. The Resilience and Sustainability Facility, designed to enhance resilience against climate and external shocks, was approved in March 2025 and totals approximately $1.4 billion.
The ongoing review talks are expected to last several weeks before the IMF mission and Pakistani authorities reach a staff-level agreement. Any such agreement will require approval by the IMF’s executive board prior to the release of funds.
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