Pakistan and the IMF have shifted to virtual talks for the ongoing third economic review under the Extended Fund Facility (EFF) due to the prevailing security situation in the region. The IMF delegation, led by Mission Chief Eva Petrova, has departed Islamabad after initial in-person meetings, and all subsequent discussions will now proceed online to ensure continuity.
According to sources from the Ministry of Finance, this decision allows Pakistan to maintain the scheduled timeline for the IMF review talks without disruptions. The IMF and Pakistan’s economic team will hold 4 to 5 virtual sessions today and in the coming days, focusing on key performance indicators and structural reforms.
The second round of the third half-year economic review aimed at unlocking the next $1.2 billion tranche (approximately $1 billion from the EFF and $200 million from the Resilience and Sustainability Facility) commenced in Islamabad. In the inaugural meeting at a private hotel, Federal Finance Minister Muhammad Aurangzeb briefed the IMF mission on significant improvements in Pakistan’s economy.
Key Points of IMF Meeting
The Finance Minister highlighted that tough but necessary decisions have steered the economy in the right direction, with the IMF program firmly on track. Key economic indicators shared include:
- Inflation dropped to 5.2% in December 2025.
- Interest rates reduced from 22% to 10.5%.
- Foreign exchange reserves surpassing $16 billion.
- Current account deficit contained at $1.17 billion.
- Large-scale manufacturing output is rising by 6%.
- Advancements in the privatization program, notably including Pakistan International Airlines (PIA).
Ongoing reforms in taxation and the energy sector were also emphasized, demonstrating Pakistan’s commitment to fiscal discipline and sustainable growth.
The Federal Board of Revenue (FBR) presented its first-half performance report, noting a shortfall of Rs329 billion in tax collection from July to December against targets. Factors contributing to this include subdued economic activity and lower inflation, impacting revenue. However, the tax-to-GDP ratio showed improvement, and the IMF acknowledged the broader reform efforts while urging additional revenue-enhancing measures.
The agenda for the virtual talks with the IMF includes sharing the government’s priority expenditure plan, reviewing budget targets, assessing the economic fallout from recent floods, evaluating provincial tax revenues (particularly agricultural income taxes), and discussing external debt status, financing gaps, and upcoming obligations.
According to the BOL News sources, these IMF discussions are critical for Pakistan’s macroeconomic stability, continued access to international financing, and building investor confidence amid global uncertainties. Successful completion could pave the way for the release of the $1.2 billion tranche by late April 2026, further bolstering reserves and supporting ongoing reforms.
