The International Monetary Fund (IMF) has stopped the federal government from allocating funds to flood-affected areas for relief projects. Today is a crucial day as the IMF mission holds economic review talks with Pakistan’s Ministry of Finance and Ministry of Energy.
According to sources, the IMF has been briefed about the Reko Dik copper and gold mine project, whose cost has risen from $4.3 billion to $7.72 billion. The first phase estimates an annual copper production of 200,000 metric tons.
The IMF will also be updated again on flood damage and its impact on Pakistan’s economic growth, tax revenue, and development targets. Discussions will include revising budget goals after the floods. However, the IMF has instructed that provinces must fund flood recovery schemes from their own budgets to avoid budget deficits.
Read more: IMF tells Pakistan to cut spending to absorb Rs 500bn flood impact
The IMF emphasized that provinces ensure flood recovery projects do not reduce their fiscal surpluses. In talks with the Ministry of Energy, the IMF will focus on power sector reforms, including reducing line losses and improving electricity bill recoveries.
Furthermore, the IMF mission will request a timeline for the privatization of DISCOs (distribution companies). Finance Minister Muhammad Aurangzeb will participate in policy-level talks, which will also cover provincial fund transfers under the NFC Award.
Read more: Punjab flood crisis threatens surplus, Pakistan seeks IMF support
Officials will inform the IMF that the new National Tariff Policy 2025-30 aims to gradually reduce import duties to boost exports and investment. The economic team is hopeful that the IMF mission will recommend releasing the next tranche of funds.
Meanwhile, the Prime Minister’s Office has become active in securing the next IMF tranche. It has directed all departments and ministries to submit progress reports on IMF conditions and explain any unmet requirements.