ISLAMABAD: The International Monetary Fund (IMF) will convene its Executive Board on May 8 to consider the approval of over $1.2 billion in funding for Pakistan under two ongoing programmes — the $7 billion Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).
According to IMF officials, Pakistan has qualified for approximately $1 billion following the successful completion of the third review under the EFF, along with about $210 million under the second review of the RSF. A staff-level agreement (SLA) for the disbursement was reached on March 27.
In the lead-up to the board meeting, both sides have been engaged in policy adjustments, particularly in fuel pricing and the gradual withdrawal of subsidies, to meet the petroleum levy target of Rs1.47 trillion for the current fiscal year. Collections have already exceeded Rs1.2 trillion in the first nine months, putting the government on track to surpass the annual target.
The government is also weighing options to further increase the levy on petrol or reinstate it on diesel to offset revenue shortfalls faced by the Federal Board of Revenue (FBR). The IMF has consistently urged the phase-out of fuel subsidies as part of broader fiscal reforms.
Meanwhile, discussions continue between Pakistan and the Fund regarding flexibility in programme parameters, expected to be reflected in the upcoming federal budget. The government has reaffirmed its commitment to fiscal discipline while seeking adjustments in light of evolving global and regional economic challenges.
The IMF noted that Pakistan’s reform programme under the EFF remains broadly on track, focusing on strengthening public finances, maintaining inflation within the target range of the State Bank of Pakistan, improving energy sector viability, and advancing structural reforms. It also emphasised efforts to enhance social protection and increase spending on health and education.
The RSF-backed climate reform agenda is progressing steadily, aimed at building resilience against climate-related risks and reducing economic vulnerabilities.
IMF Mission Chief Iva Petrova stated that, subject to board approval, total disbursements under the EFF and RSF programmes would reach approximately $4.5 billion. She added that ongoing reforms have helped stabilise the economy, boost market confidence, and support a gradual recovery in economic activity.
However, the IMF cautioned that external risks — including geopolitical tensions in the Middle East, volatile energy prices, and tighter global financial conditions — could pose challenges by exerting pressure on inflation, growth, and the current account.
Pakistan has committed to maintaining a sustainable fiscal path, targeting a primary surplus of 1.6% of GDP in FY26 and 2% in FY27. These goals are supported by efforts to broaden the tax base, enhance revenue collection through digitalisation and improved audits, and strengthen expenditure discipline, while continuing to expand social sector spending.
The government has also pledged to accelerate institutional reforms within the FBR to improve governance and ensure effective implementation of fiscal measures critical to long-term economic stability.
Story by Khaleeq Kiani
