Pakistan’s negotiations with International Monetary Fund have entered a decisive stage, with both sides making substantial progress toward a staff-level agreement on two key financing arrangements — the 37-month Extended Fund Facility (EFF) and the 28-month Resilience and Sustainability Facility (RSF). Though discussions are ongoing to settle remaining policy differences, officials close to the talks have described the recent round of meetings as a critical step forward in ensuring economic stability and reform momentum.
The IMF mission, led by Iva Petrova, held extensive consultations with Pakistani authorities in Karachi and Islamabad from September 24 to October 8, 2025. These discussions focused on the second review of the EFF and the first review of the RSF, both central to Pakistan’s macroeconomic stabilization plan. At the conclusion of the mission, the IMF confirmed that major areas of agreement have been achieved, laying the groundwork for finalizing the staff-level agreement in the coming weeks.
Petrova noted that the implementation of Pakistan’s reform commitments remains strong and largely aligned with agreed objectives. She emphasized that progress has been made in sustaining fiscal consolidation to strengthen public finances, while still providing targeted support for ongoing flood recovery efforts. Inflation control also remains a priority, with a firm commitment to maintaining a tight, data-driven monetary policy under the guidance of State Bank of Pakistan to keep inflation within target ranges.
Energy sector restructuring was another key area of progress. Regular tariff adjustments, combined with cost-reduction measures and structural reforms, are being advanced to restore the financial sustainability of the power sector. These steps are expected to help reduce circular debt, improve efficiency, and support broader fiscal stability. The IMF also highlighted progress on broader structural reforms, including measures to reduce the state’s footprint in commercial sectors, enhance governance and transparency, and create a more competitive business environment.
The RSF discussions particularly focused on Pakistan’s climate resilience and long-term sustainability measures. Petrova confirmed that productive conversations were held around completing key reforms aimed at improving climate adaptability and integrating environmental considerations into economic planning. This includes reforms to better manage climate risks and unlock green financing opportunities.
While significant headway has been made, both sides acknowledge that policy discussions will continue in the coming days to resolve outstanding issues before the agreement can be formalized. Petrova expressed sympathy for communities affected by recent floods and extended appreciation to Pakistani authorities, the private sector, and development partners for their engagement and hospitality during the mission.
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