Pakistan expects to secure around $15 billion in foreign financing during the current fiscal year against external debt obligations of approximately $21.5 billion, while the International Monetary Fund (IMF) has called for faster progress on energy-sector reforms and compliance with agreed circular debt targets.
The discussions took place during ongoing negotiations between Pakistan and the IMF, with officials familiar with the talks saying the Fund is seeking quicker implementation of reforms in the power and energy sector. The IMF has also emphasized the need for Pakistan to remain within the agreed limits for circular debt as part of the commitments under its economic reform programme.
Pakistani officials briefed the Fund on measures undertaken so far to address challenges in the energy sector. They also highlighted the impact of the tense regional situation on the sector and its financial position. Under the government’s zero-inflow target, Pakistan is aiming to contain accumulated circular debt at around Rs1.6 trillion, with the authorities expected to maintain controls over additional accumulation.
On the external financing side, the government told the IMF that total external debt repayments for the fiscal year are estimated at about $21.5 billion. The amount includes approximately $3.5 billion in interest payments. Pakistan has already paid around $2.2 billion during July, comprising $1.4 billion in Chinese commercial loans and another $800 million in other external obligations.
The government expects the external repayment burden to decline during the remaining 11 months of the fiscal year. Officials said the estimated repayment requirement would be about $5 billion lower than the $26.5 billion recorded for the previous year. Against the repayment requirement, Pakistan is targeting foreign financing of approximately $15 billion to help meet its external obligations and support the country’s balance of payments position.
Pakistan also briefed the IMF on measures taken to strengthen its foreign exchange reserves, including timely financial support from Saudi Arabia. The State Bank of Pakistan (SBP) has purchased around $28 billion from the interbank foreign exchange market over the past three years, including approximately $9 billion during fiscal year 2025-26. The purchases have contributed to efforts to rebuild the country’s foreign exchange buffers.
The IMF also raised concerns about income tax collection targets linked to the agriculture sector. The federal government argued that farmers are facing higher production costs due to the regional situation, leaving many agricultural producers under financial pressure and limiting their ability to absorb significant income tax liabilities.
According to officials, provincial governments are taking measures to increase agricultural income tax collections and non-tax revenues as they work to meet their respective fiscal surplus targets. The Federal Board of Revenue (FBR) also briefed the IMF on its ongoing digitalization programme aimed at improving tax collection and administration.
The discussions further covered provincial efforts to raise non-tax revenues and achieve targeted fiscal surpluses. These measures remain part of the broader fiscal reform agenda being reviewed during the IMF negotiations. A separate session on Pakistan’s automobile policy is also scheduled between the two sides as the discussions continue.
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