The International Monetary Fund (IMF) and Pakistani authorities have made substantial headway in their discussions, moving closer to a Staff Level Agreement (SLA) for the first review under Pakistan’s 37-month Extended Fund Facility (EFF). Although the talks did not conclude with an SLA, both parties will continue their virtual policy discussions over the coming days to finalize the agreement.
An IMF delegation, led by Nathan Porter, visited Islamabad and Karachi from February 24 to March 14, 2025, to evaluate the first review of Pakistan’s economic program supported by the EFF. The mission also discussed potential support under the IMF’s Resilience and Sustainability Facility (RSF).
Porter stated, “Program implementation has been strong, and considerable progress has been made in several key areas, including fiscal consolidation to reduce public debt, maintaining a tight monetary policy to curb inflation, advancing reforms in the energy sector, and implementing structural reforms to boost growth. These measures aim to strengthen social protection and rebuild health and education spending.”
He also highlighted progress in discussions regarding Pakistan’s climate reform agenda, which focuses on reducing vulnerability to natural disaster risks, with potential support from the RSF.
Finance Minister Muhammad Aurangzeb expressed satisfaction with the ongoing negotiations, stating that the implementation of the IMF-backed program has been robust. He confirmed that discussions would continue next week, with Pakistan presenting its economic performance and progress in fiscal reforms to the IMF.
The Pakistani government has assured the IMF of its commitment to structural reforms, including expanding the tax base and addressing fiscal deficits. While a staff-level agreement has not yet been finalized, both sides remain optimistic that further discussions will lead to the next tranche of financial assistance.
The IMF has reportedly emphasized the need for stricter tax compliance and additional measures to address the energy sector’s circular debt.