ISLAMABAD: Authorities are optimistic about concluding a staff-level agreement (SLA) with the International Monetary Fund (IMF) during Finance Minister Muhammad Aurangzeb’s upcoming visit to the United States. The agreement hinges on consensus regarding Pakistan’s external account and the verification of flood-related losses and their fiscal distribution among federal and provincial accounts.
Officials confirmed that the IMF shared a draft Memorandum of Economic and Financial Policies (MEFP) before its mission departed Pakistan after two weeks of discussions. “We were at the cusp of finalising the SLA, but two crucial tables that form part of the MEFP required further adjustments,” an official source said, adding that updated remittance figures had strengthened Pakistan’s position on the external account.
Read More: IMF to Review Pakistan’s Flood Spending, Budget Plans
The IMF mission reportedly appreciated the performance of the Power Division, led by Secretary Dr Fakhre Alam Irfan, for exceeding most performance indicators. However, it cautioned that timely tariff adjustments and payment of provincial subsidies would be essential for sustainability.
Flood-affected districts where electricity bills were waived will see adjustments in subsidies, while provinces are expected to meet cash surplus targets. The government plans to maintain a tight fiscal policy, limiting development spending, particularly outside flood-hit areas.
Read More: Federal Government Waives August Power Bills for Flood Areas
The Federal Board of Revenue (FBR) is expected to revise its revenue target downward, with new corrective measures taking effect by January 1, 2026, to offset potential shortfalls. Officials noted that public debt metrics, including interest rate composition, maturities, and sukuk positions, remain within safe limits.
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In an end-of-mission statement, the IMF said significant progress had been made toward finalising the SLA under the 37-month Extended Fund Facility (EFF) and the 28-month Resilience and Sustainability Facility (RSF).
Pakistan expects to receive $1.2 billion in combined disbursements from both programmes next month, subject to IMF board approval.
The IMF delegation visited Karachi and Islamabad from Sept 24 to Oct 8, praising Pakistan’s adherence to its reform commitments, including fiscal consolidation, inflation control, energy sector reform, and climate resilience initiatives. “Programme implementation remains strong, broadly aligned with the authorities’ commitments,” the Fund said, expressing sympathy for communities affected by recent floods.