Pakistan and the International Monetary Fund (IMF) have formally begun discussions for the fourth review of the country’s Extended Fund Facility (EFF) programme and the third review of the Resilience and Sustainability Facility (RSF). The IMF mission, led by Iva Petrova, is currently in Islamabad for the latest assessment, which will examine Pakistan’s performance under both programmes through the end of June 2026 as well as the policy framework and reform measures planned for the period ahead.
The discussions formally commenced with a meeting between the IMF delegation and Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, according to an update issued by the Ministry of Finance. The mission is assessing implementation of commitments under the Fund-supported programmes, including fiscal measures, revenue mobilisation, structural reforms and policies aimed at strengthening Pakistan’s economic and external position.
Pakistan is currently implementing a 37-month, $7 billion EFF programme approved by the IMF in September 2024. The programme is designed to support macroeconomic stability through fiscal consolidation, structural reforms and measures intended to create conditions for sustainable economic growth. Alongside the EFF, the RSF focuses on reforms aimed at strengthening Pakistan’s resilience to climate-related risks and addressing vulnerabilities associated with climate-related economic challenges.
Successful completion of the two reviews could make Pakistan eligible for approximately $1 billion under the EFF, equivalent to 760 million Special Drawing Rights (SDRs), along with another $200 million under the RSF. The combined potential disbursement would therefore be around $1.2 billion. However, completion of staff-level discussions would not immediately release the funds, as any staff-level agreement would subsequently require consideration and approval by the IMF Executive Board before the disbursements can take place. Current expectations are that the funds could be released by the end of November or in early December, subject to completion of the required review and approval process.
Fiscal performance and revenue mobilisation are expected to be central areas of the latest discussions. A key issue is the Federal Board of Revenue’s (FBR) ability to meet its revenue commitments under the programme. The current review is particularly significant because the EFF includes the FBR’s first-ever half-yearly revenue collection structural benchmark. The IMF is expected to assess the tax authority’s performance against the relevant commitments as well as its preparedness to meet the programme’s revenue targets.
The discussions are also expected to examine measures to broaden Pakistan’s tax base, improve tax administration and strengthen provincial tax and non-tax revenue collection. The review follows a period in which Pakistan recorded a significant revenue shortfall against some programme expectations. While overall fiscal performance through June 2026 has largely remained on track, official sources cited by Dawn reported slippages in parts of the policy matrix. The IMF review will therefore assess the extent of progress against individual commitments alongside the broader fiscal position.
Energy-sector reforms are another major component of the negotiations. The IMF is expected to examine progress in reducing circular debt and improving the financial and operational performance of Pakistan’s energy sector. Discussions are also likely to cover measures related to efficiency, governance and structural weaknesses in the power and gas sectors. The government is expected to brief the Fund on developments in the electricity sector and other measures being implemented under the ongoing reform programme.
The latest review will also cover Pakistan’s wider macroeconomic position, including the current account, foreign exchange reserves, exchange rate and primary fiscal balance. These indicators will be assessed alongside progress on fiscal consolidation and external-sector stability. The Finance Ministry has previously highlighted improvements in fiscal and external balances, foreign exchange reserves, remittances and the current account position during its engagements with IMF senior management.
The negotiations are taking place amid external risks that could affect Pakistan’s economic position, including volatility in global energy markets. Changes in international energy prices can influence the country’s import bill, inflation and external financing requirements, making developments in global markets an additional factor for the IMF and Pakistani authorities to consider during the review. The outcome of the discussions will determine whether Pakistan progresses toward the next disbursements under the EFF and RSF after completion of the required staff-level and Executive Board processes.
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