IMF - International Monetary Fund Program Updates

IMF agrees to govt's proposal for electricity price reduction​


Sources indicate that electricity base tariffs could be reduced by Re1 to Rs2 per unit.

Irshad Ansari
March 11, 2025

tribune


The International Monetary Fund (IMF) has agreed to the government's proposal to reduce electricity prices, with a final decision expected next month.

Sources indicated that electricity base tariffs could be reduced by Re1 to Rs2 per unit, with both the National Electric Power Regulatory Authority (NEPRA) and the Ministry of Energy now authorised to adjust rates.

However, the IMF has expressed concern over delays in the privatisation of Distribution Companies (DISCOs). The IMF stated that improvements in the power sector are unlikely without first addressing the performance of these companies.

The IMF also rejected the Ministry of Energy’s proposed amendments to the NEPRA Act.

Meanwhile, crucial talks on the circular debt in the power sector were set to take place on Tuesday, with ongoing discussions on revenue collection by the Federal Board of Revenue (FBR), agricultural taxes, and property taxes.

A new IMF delegation is expected to arrive after Eid to discuss governance matters with the Pakistani government.

In related developments, Pakistan’s policy-level discussions with the IMF are ongoing, with the country updating the IMF mission on the implementation of strict conditions.
 

Mini-budget unlikely as IMF satisfied with Pakistan’s economic measures​


IMF calls for removal of tax exemptions on electric vehicles and solar panels.

Irshad Ansari
March 14, 2025

tribune


No mini-budget will be introduced before the end of June as the International Monetary Fund (IMF) has expressed satisfaction with Pakistan's economic measures, Express News reported on Friday.

The final day of negotiations between Pakistan and the IMF will conclude today, following technical sessions and policy-level discussions.

A meeting between the IMF delegation and Finance Minister Ishaq Dar is scheduled today, with an iftar dinner hosted by the minister in honor of the delegation.

Once the talks are finalised, the IMF team will prepare an assessment report, which will be submitted to the Executive Board for a decision on the release of the next $1 billion tranche of financial assistance to Pakistan.



The agenda for today includes reviewing Pakistan's budgetary targets, the performance of the current fiscal year, and discussing the tax shortfall as well as new tax goals. Both sides are expected to finalize proposals before the conclusion of the negotiations.

Pakistan has engaged in extensive discussions with the IMF, fulfilling most of the institution's targets and providing all necessary economic data. However, the IMF has called for the removal of tax exemptions for solar panels and electric vehicles, which it views as luxury items benefiting the wealthy.

The IMF also pushed for the elimination of tax breaks on electric vehicle parts and stricter enforcement of fiscal discipline.

Once the negotiations are concluded, the IMF delegation is set to return, with the final agreements expected to shape the next phase of Pakistan’s economic support from the global lender.
 

IMF okays staff-level deal for Pakistan to get $1.3bn package​

IMF says Pakistan has made significant progress in restoring macroeconomic stability over past 18 months​


By Reuters
March 26, 2025


This photo taken on January 26, 2022, shows the seal for the International Monetary Fund (IMF) in Washington, DC. — AFP
This photo taken on January 26, 2022, shows the seal for the International Monetary Fund (IMF) in Washington, DC. — AFP
WASHINGTON: International Monetary Fund staff reached a deal with Pakistan for a new $1.3 billion arrangement and also agreed on the first review of the ongoing 37-month bailout program, the IMF said on Tuesday.

Sponsored Content

[Pics] This Is Common in Dubai, And It Happens Every Day[Pics] This Is Common in Dubai, And It Happens Every DayNovelodge

[Gallery] She Never Married And Now We Know Why[Gallery] She Never Married And Now We Know WhyDailySportX

[Photos] Her Dress At The Oscars Will Be Spoken About For Centuries[Photos] Her Dress At The Oscars Will Be Spoken About For CenturiesTopbunt

"Over the past 18 months, Pakistan has made significant progress in restoring macroeconomic stability and rebuilding confidence despite a challenging global environment," the IMF said in a statement.

The new 28-month deal would support Pakistan's efforts to mitigate and adapt to climate change, the Fund said in the statement announcing its decision.


Both the new programme and the loan review require approval from the Fund's executive board, which is largely a rubber-stamping exercise.

Pakistan’s inflation is expected to remain steady in March, in the 1% to 1.5% range, according to the country’s finance ministry in its monthly economic outlook. This follows a slowdown to its lowest level in almost a decade the previous month.

"Upon approval (by the IMF board), Pakistan will have access to approximately $1 billion under the EFF, bringing total disbursements under the programme to around $2 billion," the IMF stated.

The country's finance minister expressed optimism with results of policies that the government has executed in line with the lender. "We remain committed to stay the course and continue to execute structural reforms with respect to taxation, energy and SOEs to put our country on the trajectory of sustainable productivity and export led-growth," said Muhammad Aurangzeb, the finance minister, while talking to Geo News from China.

Inflation in the South Asian country has been falling for several months, dropping to 1.5% in February, after soaring to around 40% in May 2023.

Pakistan maintains that its $350 billion economy has stabilised under a $7 billion IMF bailout, which helped avert a default.

"While economic growth remains moderate, inflation has declined to its lowest level since 2015, financial conditions have improved, sovereign spreads have narrowed significantly, and external balances are stronger," the IMF said.

Islamabad had been awaiting the IMF’s agreement on the first review of the bailout and the disbursement of $1 billion ahead of the country's annual budget, usually presented in June.

The IMF statement also noted what it called elevated downside risks such as "geopolitical shocks to commodity prices, tightening global financial conditions, or rising protectionism."

It warned that such risks could undermine Pakistan’s "hard-won macroeconomic stability."

The IMF statement issued earlier today also said the Pakistani authorities remained "committed to advancing a gradual fiscal consolidation to sustainably reduce public debt," along with tight monetary policy, cost-cutting measures and reforms, as they agreed in principle to the second review of the existing 37-month programme.

"Additionally, climate-related risks continue to pose a significant challenge for Pakistan, creating a need to build resilience including through adaptation measures," IMF mission chief Nathan Porter said in the statement.

“In this regard, it is critical to stay the course and entrench the progress achieved over the past one and a half years, building resilience by further strengthening public finances, ensuring price stability, rebuilding external buffers and eliminating distortions in support of stronger, inclusive and sustained private sector-led growth."

"Supported by the RSF, the authorities’ program is committed to: (i) strengthening public investment processes across all levels of government to prioritize projects that enhance disaster resilience; (ii) improving the efficiency of scarce water resource usage, including through better pricing mechanisms; (iii) enhancing intergovernmental coordination on disaster financing; (iv) improving information architecture and disclosure of financial and corporate climate-related risks; and (v) promoting green mobility to mitigate significant pollution and adverse health impacts," it added.

www.thenews.com.pk

IMF okays staff-level deal for Pakistan to get $1.3bn package

WASHINGTON: International Monetary Fund staff reached a deal with Pakistan for a new $1.3 billion arrangement and also agreed on the first review of the ongoing 37-month bailout program, the...
www.thenews.com.pk www.thenews.com.pk
 
If your entire economic vision is to 'beg', any loan is a major economic milestone.
To view this content we will need your consent to set third party cookies.
For more detailed information, see our cookies page.
 
To view this content we will need your consent to set third party cookies.
For more detailed information, see our cookies page.
 

IMF approves disbursement of $1bn to Pakistan under $7bn deal​

Dawn.com | Tahir Sherani
May 9, 2025

The International Monetary Fund (IMF) on Friday approved the immediate disbursement of about $1 billion to Pakistan under the ongoing Extended Fund Facility (EFF) and allowed an additional arrangement for the $1.4bn Resilience and Sustainability Facility (RSF).

In a statement issued today, the IMF said its Executive Board completed the first review of Pakistan’s economic reform program supported by the EFF Arrangement.

“This decision allows for an immediate disbursement of around $1bn (SDR 760 million), bringing total disbursements under the arrangement to about $2.1bn (SDR 1.52 billion). In addition, the IMF Executive Board approved the authorities’ request for an arrangement under the RSF, with access of about $1.4bn (SDR 1 billion),” it said.

It noted that Pakistan’s policy efforts under the EFF had already delivered “significant progress” in stabilising the economy and rebuilding confidence, amidst a challenging global environment.

“Fiscal performance has been strong, with a primary surplus of two per cent of gross domestic product achieved in the first half of FY25, keeping Pakistan on track to meet the end-FY25 target of 2.1pc of GDP. Inflation fell to a historic low of 0.3pc in April, and progress on disinflation and steadier domestic and external conditions, have allowed the State Bank of Pakistan to cut the policy rate by a total of 1100 bps since June 2025. Gross reserves stood at $10.3bn at end-April, up from $9.4bn in August 2024, and are projected to reach $13.9bn by end-June 2025 and continue to be rebuilt over the medium term.”

Meanwhile, it said the RSF would support the authorities’ efforts to reduce vulnerability to natural disasters and build economic and climate resilience.

A statement from the Prime Minister’s Office (PMO) said PM Shehbaz Sharif expressed satisfaction over the approval and “the failure of India’s high-handed tactics” against Pakistan.

“The country’s economic situation has improved and the country is moving towards development. India is plotting a conspiracy to divert attention from our country’s development through unilateral aggression.

“International institutions have responsibly rejected India’s false propaganda. Indian attempts to sabotage the IMF programme have failed,” it quoted the prime minister as saying.

The premier said the programme would help stabilise the economy and put it on the path towards long-term recovery, adding that the government was working on priority areas such as tax reform, improved energy sector performance and private sector development.

“The improved economic indicators in the last 14 months are a reflection of the government’s positive policies.

“Pakistan’s economic stability strategy, effective performance and sustainable planning are committed to this,” the statement said.

The approval of the IMF’s executive board has led to an immediate disbursement of $1bn, bringing total disbursements under the loan programme to about $2bn. On successful completion of seven half-yearly reviews, Pakistan is entitled to seven equal instalments of about $1bn (SDR 760 million) under the loan programme.

Pakistan and the IMF had reached a three-year, $7bn aid package deal in July, with the new programme set to allow the country to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth”.

The two sides had reached a staff-level agreement on March 25 on the first biannual review of the 39-month $7bn loan programme, agreeing on a series of reforms including the introduction of a carbon levy, timely revisions to electricity tariffs, increased water pricing and liberalisation of the automobile sector.

The staff-level agreement also entailed a new 28-month RSF arrangement, providing total access to around $1.3bn (1bn special drawing rights, or SDRs).

This takes the combined size of the IMF support to about $8.3bn. The additional RSF financing, unlike the bailout package’s biannual review and disbursement schedule, is subject to disbursement on completion of specific projects and policy actions to build climate resilience.

The board approval would be soon followed by another IMF mission visiting Pakistan to finalise the 2025-26 budget to be presented in the National Assembly in the first week of June.

The implementation of major reforms — including the carbon levy, water pricing and automobile protectionism — would begin gradually from July 1.

The overall ongoing fiscal consolidation will continue in the coming budget through a reduction in energy subsidies and tight development spending.
 

Pakistan receives second IMF tranche of $1.02b: SBP​


IMF board also approved Pakistan’s request for an arrangement under the Resilience and Sustainability Facility (RSF).

News Desk
May 14, 2025
state bank of pakistan photo file

State Bank of Pakistan.

Pakistan has received a second tranche of $1.023 billion, equivalent to 760 million in Special Drawing Rights (SDR), from the International Monetary Fund (IMF) under its Extended Fund Facility (EFF), the State Bank of Pakistan (SBP) announced on Wednesday.

According to the central bank, the inflow will be reflected in the country’s foreign exchange reserves for the week ending May 16.

The disbursement follows the IMF Executive Board’s completion of the first review of Pakistan’s ongoing economic reform programme, which is supported under the EFF arrangement agreed in 2024.

With the latest transfer, total disbursements under the programme now stand at approximately $2.1 billion (SDR 1.52 billion).

In the same session, the IMF board also approved Pakistan’s request for an arrangement under the Resilience and Sustainability Facility (RSF), granting access to around $1.4 billion (SDR 1 billion).

The RSF is intended to support countries facing climate vulnerabilities and natural disasters by strengthening long-term macroeconomic stability and resilience.

The broader EFF programme, originally agreed at the staff level in July 2024, totals SDR 5.32 billion — approximately $7 billion. It was formally approved by the IMF’s Executive Board in September of that year.

Analysts view the IMF programme as critical to Pakistan’s economic outlook, offering not only a buffer for the country’s depleting reserves but also a framework for structural reform.

The disbursements are expected to ease pressure on Pakistan’s balance of payments and strengthen investor confidence.
 
To view this content we will need your consent to set third party cookies.
For more detailed information, see our cookies page.
 

IMF official visits amid budget talks​


Trip comes as govt, global lender negotiate tax targets, defence spending, and relief for salaried class ahead of new

Shahbaz Rana
May 21, 2025

imf photo reuters



ISLAMABAD: The International Monetary Fund (IMF)'s regional director, Jihad Azour, is visiting Pakistan this week in the middle of negotiations for approval of the new budget, as both sides are taking time to converge on key issues of increasing taxes and rationalising expenses.

Government sources told The Express Tribune that Jihad Azour, the IMF's Director for the Middle East and Central Asia, would also meet Prime Minister Shehbaz Sharif during his visit this week. Azour will also hold discussions with Finance Minister Muhammad Aurangzeb.

The regional director is visiting Pakistan 10 days after the approval of the second loan tranche of the $7 billion programme, despite opposition from India. Azour's visit is a testimony to smooth relations between the lender and the borrower, despite New Delhi's negative campaign.

Both the Ministry of Finance and the IMF resident representative remained tight-lipped about the purpose of the visit at a time when the IMF staff is already in Pakistan to reach an agreement on the new budget for fiscal year 2025-26.

One senior government functionary said the government would take up some outstanding budget-related issues with the IMF director, particularly regarding major spending items. The IMF has imposed a new condition on Pakistan that the government must secure parliamentary approval of the new budget in line with the IMF staff agreement to meet programme targets. This leaves little space for the government to implement its own agenda, although PM Sharif wants to provide relief to the salaried class.

The sources said the tax target, defence spending, and some grant-related issues were being discussed. The federal government has decided to allocate nearly Rs2.504 trillion for defence spending in the next fiscal year, which is 18% higher than this year's allocation. However, the IMF's staff-level report released on Saturday showed defence spending at Rs2.414 trillion, an increase of 12%. Some grants and subsidy allocations have also not yet been finalised.

The Federal Board of Revenue (FBR) on Monday presented the taxation proposals for the next fiscal year to the prime minister. The PM was also briefed that the FBR's tax target may be around Rs14.07 trillion, which is roughly Rs240 billion less than the earlier mutually agreed target between the IMF and the government for fiscal year 2025-26, they added.

However, there is a possibility that the government may substantially increase petroleum levy rates in the Finance Bill 2025. The IMF has projected petroleum levy collection at over Rs1.3 trillion for the next fiscal year, which could become the single largest non-tax revenue source if the government starts charging Rs100 per litre levy on petrol and diesel. The current rate is Rs78 per litre.

The finance ministry will have to find space to adjust the Rs240 billion reduction in the earlier agreed target if the petroleum levy is not immediately increased to Rs100 per litre in the budget. For the outgoing fiscal year, the FBR's tax target has further dropped to Rs12.16 trillion after economic growth remained below the government's conservative estimates.

The sources said the PM termed the proposed relief in income tax for the salaried class and the cut in super tax rates as insufficient. He directed tax authorities to provide significant respite to salaried individuals in consultation with the IMF.

The sources said the PM stated in the meeting that providing relief to the salaried class was his top priority. Salaried individuals paid a whopping Rs437 billion in taxes in just 10 months of this fiscal year, which was Rs150 billion higher than the previous record. The FBR's claims before the prime minister and the IMF that it would compensate for the shortfall in taxes through enforcement measures and by settling litigation cases have proven incorrect. This has created a trust issue between the IMF and the FBR, said the sources.

In addition to the standard 29% income tax from the corporate sector, the government also charges a 10% super tax, which might be reduced in phases.

The FBR's single biggest failure was its inability to collect the IMF-set target of Rs36.7 billion from traders in nine months under the Tajir Dost Scheme. The IMF report revealed that collections were less than Rs4 million during the first half. For the next fiscal year, the IMF has dropped the Tajir Dost Scheme and proposed a new target, which may shift the focus away from retailers. The IMF and the government have agreed to collect a cumulative Rs531 billion in taxes from retailers in the next fiscal year, including other applicable taxes.
 

Pakistan ‘met all targets’, received board consensus for fund release: IMF​

IMF says its funding intended to resolve balance of payments issues and not for general budgetary spending

BR Web Desk
May 23, 2025

Reaffirming its confidence in Pakistan’s economic reform, the International Monetary Fund (IMF) stated that its Executive Board approved funding for the country after it “met all the targets” under the Extended Fund Facility (EFF) programme.

Speaking to reporters on Thursday, the International Monetary Fund’s spokesperson, Julie Kozack, clarified that the Fund’s disbursements are strictly allocated to Pakistan’s central bank (State Bank of Pakistan) reserves and are subject to robust safeguards and conditionalities.

“It is part of a standard procedure under programs that our Executive Board conducts periodic reviews of lending programs to assess their progress. And they particularly look at whether the programme is on track, whether the conditions under the programme have been met, and whether any policy changes are needed to bring the programme back on track.

“And in the case of Pakistan, our Board found that Pakistan had indeed met all of the targets. It had made progress on some of the reforms, and for that reason, the Board went ahead and approved the programme,” she said.

Kozack’s remarks came amid questions regarding Board dynamics and Pakistan’s recent conflict with India.

On the appointment of the Indian Executive Director at the IMF, the Fund’s spokesperson said, “The appointment of Executive Directors is a member for the – is a matter for the member country. It’s not a matter for the Fund, and it’s completely up to the country authorities to determine who represents them at the Fund”.

On the recent Pakistan-India conflict, Kozack expressed “regrets and sympathies for the loss of life and the human toll from the recent conflict”.

“We do hope for a peaceful resolution of the conflict,” she said.

Elaborating on the IMF’s ongoing programme with Pakistan, Kozack said that the IMF Executive Board approved Pakistan’s EFF program in September of 2024.

“The first review at that time was planned for the first quarter of 2025. And consistent with that timeline, on March 25th of 2025, the IMF Staff and the Pakistani authorities reached a Staff-Level Agreement on the First Review for the EFF.

“That agreement, the Staff-Level Agreement, was then presented to our Executive Board, and our Executive Board completed the review on May 9th. As a result of the completion of that review, Pakistan received the disbursement at that time.”

Regarding how decisions are made at the IMF, she explained that the Board typically operates by consensus, and individual votes are not made public.

“In general, Fund Board decisions are taken by consensus, and in this (Pakistan) case, there was a sufficient consensus at the Board to allow us to move forward or for the Board to decide to move forward and complete Pakistan’s review,” the spokesperson said.

Concerning the question on safeguards, Kozack highlighted that the IMF funding is used by countries to resolve balance of payments issues, not for general budget spending.

“I do want to make three points here. The first is that IMF financing is provided to members for the purpose of resolving balance of payments problems.

“In the case of Pakistan, and this is my second point, the EFF disbursements, all of the disbursements received under the EFF, are allocated to the reserves of the central bank. So, those disbursements are at the central bank, and under the program, those resources are not part of budget financing. They are not transferred to the government to support the budget.

“And the third point is that the program provides additional safeguards through our conditionality. And these include, for example, targets on the accumulation of international reserves.

“It includes a zero target, meaning no lending from the central bank to the government.”

Moreover, the programme also includes substantial structural conditionality around improving fiscal management, she said.

“These conditions are all available in the programme documents if you want to do a deeper dive. And, of course, any deviation from the established program conditions would impact future reviews under the Pakistan programme.”
 
You must log in or register to reply here.

Users who are viewing this thread

Total: 1 (members: 0, guests: 1)

Pakistan Defence Latest

Country Watch Latest

Latest Posts

Share this page

Back
Top