The International Monetary Fund (IMF) delegation is arriving in Pakistan on February 25 for the third half-yearly economic review under the ongoing loan program.

The mission will assess Pakistan’s economic performance from July to December 2025 and hold negotiations aimed at securing continued support under the $7 billion Extended Fund Facility (EFF) and the next $1.4 billion tranche of the Resilience and Sustainability Facility (RSF).

The IMF mission will begin discussions in Karachi with officials of the State Bank of Pakistan. After the initial round, the delegation will travel to Islamabad next week, where talks with the government’s economic team will continue until March 11.

Focus on reforms, governance, key appointments

The delegation will receive detailed briefings on reforms across multiple sectors, including energy sector restructuring and the privatization program.

Governance and anti-corruption measures will also be reviewed, particularly transparency in appointments of heads of key institutions such as the National Accountability Bureau (NAB), the Competition Commission of Pakistan, and the Securities and Exchange Commission of Pakistan.

According to the Ministry of Finance, an action plan for reforms, including disclosure of assets of government officials, has already been shared with the IMF.

Budget 2026-27, fiscal framework on agenda

Alongside the economic performance review, discussions will cover the outline of Budget 2026-27. The provincial and overall fiscal framework will be examined, including taxation measures such as tax on agricultural income.

Finance Ministry officials maintain that the loan program aimed at improving governance and eliminating corruption remains on track.

Despite challenges including recent floods and a changing regional situation, most IMF targets have been achieved — except for Federal Board of Revenue (FBR) tax collection.

The annual tax target was originally set at Rs14,131 billion but was reduced by Rs152 billion to Rs13,979 billion. However, the FBR recorded a shortfall of Rs329 billion in the first six months and Rs372 billion in the first seven months of the fiscal year.

Officials have indicated that a proposal for further reduction in the revised tax target may be presented. The revised target is expected to remain viable if additional revenue is generated through super tax.

Positive macroeconomic indicators

According to the Ministry of Finance, Pakistan has achieved a primary fiscal surplus, while provincial governments have posted a cash surplus and met their tax revenue targets.

Foreign exchange reserves currently stand above $16 billion — equivalent to more than three months of imports. The current account situation has also remained encouraging.

The review is part of the continuation of the $7 billion Extended Fund Facility and the next tranche under the $1.4 billion RSF program.

Together, the two facilities amount to $8.4 billion in financial support. The upcoming review will determine the release of the next tranche and the pace of future reforms.