The International Monetary Fund (IMF) and Pakistan made a great progress in discussions on the first review of the EFF Fund (EF) and a potential facility for flexibility and sustainability (RSF), but no agreement has been reached at the staff level (SLA). The International Monetary Fund team visited Pakistan from February 24 to March 14, 2025, and discussions will continue now in the coming days, according to the International Monetary Fund statement.
The review covered financial unification, monetary policy, energy sector reforms, and structural improvements. RSF discussions focused on climate repair business schedules, which can be supported under the possible new International Monetary Fund attachment.
To meet the goals of the International Monetary Fund, the government has already provided financial measures, including the increase of the RS10/L in the PDL on gasoline, diesel, and additional RS791/MMBTU network tax on the generation of captive power. It is expected that the increase in PDL alone will be born from 14 to 15 billion rupees in additional monthly revenues, which helps the government’s goal to collect 1.281 trillion rupees in PDL for the fiscal year 25. Meanwhile, the goal of the FBR revenue (FBR) was reviewed by 620 billion rupees due to a declining review of the estimates of the nominal GDP.
Pakistan’s recent experience with the International Monetary Fund indicates that SLA insurance does not ensure the approval of the Board of Directors immediately. In May 2024, the International Monetary Fund was delayed until July 12, 2024, pointing to the need for more discussions and assurances on external financing. The approval of the Board of Directors lasted for two and a half months, only on September 24, 2024, after Pakistan achieved the previous conditions, including the FY25 budget, electrical tariff amendments, and gas price reviews.
Similar delays occurred in other International Regional Monetary Fund programs. Bangladesh obtained the country’s living organization for its third review in December 2024, but after three months, the approval of the Board of Directors remains suspended, most likely to the need for additional financial amendments. Sri Lanka also had to implement previous procedures such as the tax law amendments before obtaining the approval of the Board of Directors in February 2025.
Pakistan may face a similar schedule, as the International Monetary Fund may require more financial obligations before the approval of the Board of Directors. Analysts believe that the final touches on SLA may take a few weeks, and may extend to the FY26 budget offer to ensure compliance with the financial goals of representing international cash. The State Bank in Pakistan indicated that some foreign currency flows are linked to the International Monetary Fund review, and further delay can put pressure on external accounts, forcing the government to rely on high -cost commercial borrowing to achieve the goals of foreign exchange reserves. No official statement was issued by the government regarding the delay, but the discussions are expected to focus in the coming days on new tax measures, energy sector reforms, and progress in privatization plans.
