Pakistan and the International Monetary Fund are set to begin policy-level negotiations today (Wednesday) under the third review of the $7 billion Extended Fund Facility (EFF), a key step toward the release of the fourth loan tranche.
An IMF review mission has arrived in the country for a 15-day visit, scheduled to continue until March 11.
Discussions will start in Karachi with technical-level meetings at the State Bank of Pakistan, followed by policy talks in Islamabad with the Ministry of Finance.
Focus Areas of the Review
According to finance ministry sources, the IMF team will assess Pakistan’s economic performance for the first half of the fiscal year (July–December) and evaluate progress on agreed reform targets.
Key areas under review include:
Tax reforms and revenue performance
Energy sector developments
Monetary policy stance
Foreign exchange reserves
Governance and anti-corruption measures
Institutional appointments and reforms at the Federal Board of Revenue (FBR)
The upcoming federal budget framework for the next fiscal year will also be discussed.
Revenue Shortfall a Key Concern
While officials say most programme benchmarks have been met, Pakistan has faced a substantial tax shortfall.
The FBR recorded a revenue gap of Rs329 billion in the first six months of the fiscal year, which later widened to Rs372 billion.
Islamabad is expected to seek a downward revision of the annual tax collection target.
Economic Indicators
Despite revenue challenges, authorities maintain that the programme remains on track.
A primary fiscal surplus of around 1.3% of GDP has reportedly been achieved, while provinces posted a combined cash surplus of Rs1,180 billion.
Foreign exchange reserves are said to be above programme targets, and large-scale manufacturing grew by approximately 6% between July and November.
The review also falls under the broader $1.4 billion Resilience and Sustainability Facility (RSF). Pakistan has so far received $3.3 billion under the combined arrangements.
Successful completion of the review would unlock the next tranche, offering further support to Pakistan’s economic stabilisation and reform agenda.
