ISLAMABAD: The International Monetary Fund (International Monetary Fund) has urged Pakistan to maintain domestic prices of petroleum, electricity, and gas in line with actual costs while ensuring targeted protection for low-income and vulnerable consumers, as the country continues to implement its reform programme alongside a $1.3 billion tranche approval.
In its latest statement, the IMF stressed that energy sector reforms remain essential, particularly in a volatile global commodities environment. It said Pakistan must continue efforts to strengthen anti-corruption institutions, advance privatization of state-owned enterprises, and remove unnecessary regulatory barriers to improve the business environment.
The Fund’s projections indicate that Pakistan’s economic growth is expected to reach 3.5 percent in FY2027, while the primary fiscal surplus is likely to reach 1.6 percent of GDP in FY2026. Foreign exchange reserves are projected to rise to $17.5 billion by June 2026, although inflation is expected to pick up again to 8.4 percent.
The IMF noted that in an environment of high and volatile global commodity prices, maintaining cost-reflective pricing in energy—covering petroleum, electricity, and gas—is critical to sustaining recent improvements in the sector’s financial health. At the same time, it emphasized that targeted subsidies should be provided to protect the most vulnerable segments of society.
According to the Fund, continued reforms aimed at reducing inefficiencies and controlling expenditures will help ensure long-term sustainability of the energy sector and improve Pakistan’s overall economic competitiveness.
The IMF Executive Board has approved the third review under the Extended Fund Facility (Extended Fund Facility) and the second review under the Resilience and Sustainability Facility, unlocking approximately $1.1 billion and $220 million in immediate disbursements. With this tranche, total disbursements to Pakistan under both programmes have reached about $4.8 billion.
The IMF said Pakistan has shown strong implementation of its reform programme despite global geopolitical tensions, including the Middle East conflict, which helped maintain macroeconomic stability and improve external financing conditions.
Policy priorities highlighted by the IMF include sustaining macroeconomic stability, strengthening public finances, enhancing productivity and competitiveness, expanding social protection and human capital investment, reforming state-owned enterprises, improving public service delivery, and restoring the energy sector’s financial viability.
The Fund added that Pakistan’s 37-month EFF programme, approved on September 25, 2024, is designed to stabilize the economy and support sustainable long-term growth through structural reforms.
