The International Monetary Fund (IMF) has reaffirmed that structural reforms remain a central pillar of Pakistan’s IMF-supported program, particularly in the energy sector, state-owned enterprises, governance, and transparency frameworks. IMF Resident Representative in Pakistan Mahir Binici addressed these priorities during a policy session on the Extended Fund Facility (EFF) hosted by the Pakistan Institute of Development Economics (PIDE) on Friday.
Binici highlighted the salient features of the fund’s second review under Pakistan’s EFF, cautioning that macroeconomic vulnerabilities persist despite recent stabilization gains. He emphasized that continued and credible reform efforts are crucial not only for macroeconomic stability but also for strengthening long-term economic resilience, while underscoring the social costs of adjustments and the need for targeted social safety nets to protect vulnerable segments of society.
Addressing inflation and monetary policy, the IMF representative acknowledged the adverse impact of high inflation on households and highlighted the importance of a tight and credible monetary policy framework in restoring price stability. He noted that central bank independence and properly anchored inflation expectations are foundational for sustainable economic growth.
On the external sector, Binici reiterated the significance of a market-determined exchange rate, citing its role in absorbing external shocks, improving export competitiveness, and supporting foreign exchange reserve accumulation. He further stressed that strong domestic ownership and consistent implementation of reforms are essential for program success, as nationally driven and well-communicated measures help build investor confidence and support durable growth.
Binici also presented a comprehensive overview of the completion of the second review under Pakistan’s IMF EFF, approved on December 8, 2025. He noted that the 2024 EFF incorporated lessons from previous arrangements, with a stronger focus on economic resilience and sustainable growth. Key elements of the program include macroeconomic stabilization, fiscal consolidation, revenue mobilization, inflation dynamics, monetary policy, and external sector developments, including foreign exchange market improvements.
The IMF official highlighted progress achieved under the program, pointing to reductions in external imbalances, improved functioning of the foreign exchange market, and gradual easing of pressure on reserves. He stressed that these stabilization gains must be preserved through policy continuity, discipline, and consistency to ensure long-term durability.
Regarding fiscal policy, Binici emphasized consolidation to ensure debt sustainability, recommending tax base broadening, stronger tax administration, and rationalization of untargeted subsidies as critical priorities to create fiscal space for development spending and social protection.
He also commended PIDE for facilitating constructive engagement between academia and policymakers, stressing the importance of research-driven analysis and evidence-based debate in shaping effective economic policymaking.
The session, formally inaugurated by Dr. Karim Khan, Dean of Academics at PIDE, concluded with an interactive question-and-answer segment, reflecting strong academic and policy interest in Pakistan’s ongoing engagement with the IMF. Dr. Khan emphasized PIDE’s role as a platform for rigorous research and policy dialogue, highlighting program objectives such as fiscal sustainability, sustainable debt-to-GDP ratio, macroeconomic prudence, climate resilience, and social protection mechanisms.
The discussion underscored that while Pakistan has made progress in stabilizing the economy under the IMF program, continued reforms and consistent policy implementation remain essential for long-term economic resilience and sustainable growth.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.