According to the IMF, the agreement covers the third review of the 37-month Extended Fund Facility (EFF) and the second review of the 28-month RSF arrangement. The deal remains subject to approval by the IMF Executive Board.
Once approved, Pakistan will gain access to about $1.0 billion under the EFF and around $210 million under the RSF, bringing total disbursements under both programmes to roughly $4.5 billion.
The IMF noted that reforms supported by the programme have helped strengthen Pakistan’s economy and rebuild market confidence. It said economic activity is picking up, while inflation and the current account remain under control, and external buffers are improving. However, it warned that tensions in the Middle East could pose risks through volatile energy prices, tighter global financial conditions, and pressure on growth.
As part of the review process, Pakistani authorities and the IMF finalised key outlines of the 2026–27 budget, including a proposed tax collection target of Rs15.08 trillion for the Federal Board of Revenue (FBR). The Fund also encouraged more frequent adjustments in petroleum prices to better reflect global market trends, following Pakistan’s recent shift from fortnightly to weekly revisions.
The IMF outlined key policy priorities, including maintaining fiscal discipline, broadening the tax base, improving expenditure management, and increasing spending on health, education, and social protection. It also stressed the importance of better coordination between federal and provincial governments.
The Fund highlighted progress in revenue collection reforms, including stronger tax audits, expanded digital invoicing, production monitoring, and improved governance within the FBR. It added that efforts are underway to develop a medium-term tax strategy focused on stability and revenue neutrality.
On monetary policy, the IMF advised the State Bank of Pakistan to maintain a tight, data-driven stance and remain ready to raise interest rates if inflationary pressures increase.
The IMF also emphasized the need for exchange rate flexibility to absorb external shocks, particularly those arising from global uncertainties.
In the energy sector, the Fund called for timely tariff adjustments to ensure cost recovery and warned against untargeted subsidies. It also pointed to structural reforms aimed at reducing circular debt, improving power distribution, privatising inefficient generation companies, and promoting renewable energy.
Additionally, the IMF underscored the importance of strengthening the Benazir Income Support Programme through inflation-adjusted cash transfers, expanded coverage, and improved payment systems to support vulnerable households.
The statement also highlighted broader reform commitments, including privatisation, state-owned enterprise restructuring, anti-corruption measures, and climate resilience initiatives under the RSF programme.
