ISLAMABAD, May 20, 2025 — The International Monetary Fund (IMF) has acknowledged Pakistan’s strong reform efforts under its Extended Fund Facility (EFF), noting that the country has met all key performance benchmarks as of December 2024. In its latest program review, the IMF highlighted “timely and strong implementation” of economic policies that are helping restore stability and build the foundation for long-term growth.
Pakistan successfully met all seven quantitative performance criteria and five out of eight indicative targets under the program. The review pointed to improving current account performance, higher-than-expected foreign exchange reserves, and easing inflation, though core inflation remains high at 9%. The IMF emphasized that Pakistan should continue data-driven monetary tightening and maintain a market-based exchange rate to protect these gains.
However, the IMF noted that growth during the first half of FY25 has been slower than expected, though fiscal management remains on track, with the government achieving a primary surplus. The report urged Islamabad to deepen structural reforms, including broadening the tax base, reducing public debt, and increasing space for social and development spending.
Energy reforms also remain a top priority. The Fund called for regular tariff adjustments to reflect true costs, improve sector sustainability, and avoid adding pressure on the national budget. Without these steps, energy-related financial risks could stall progress.
To strengthen long-term resilience, the IMF recommended a new arrangement under its Resilience and Sustainability Facility (RSF). If approved, it would provide $1 billion in support to help Pakistan address climate risks. The RSF will focus on disaster preparedness, water resource management, and mandatory climate risk disclosures. The IMF Board is expected to review Pakistan’s RSF request in the coming months, depending on continued reform progress.