As Pakistan prepares for a crucial phase in its ongoing engagement with international financial institutions, high-level discussions have commenced between government officials and a visiting delegation from the International Monetary Fund (IMF). The mission, headed by Iva Petrova, has begun consultations in Karachi and is scheduled to remain in the country until March 11 to conduct two significant assessments under separate financing arrangements.
These discussions form part of the third evaluation under the IMF’s Extended Fund Facility (EFF) and the second review linked to the Resilience and Sustainability Facility (RSF). Together, the outcomes of these reviews carry substantial financial implications for Pakistan. If the assessments are concluded successfully, the country is expected to receive approximately $1.2 billion by late April — comprising $1 billion under the EFF programme and an additional $200 million through the RSF window.
Finance Minister Muhammad Aurangzeb has expressed cautious optimism regarding the review process. Speaking as the IMF delegation initiated its engagements, he indicated that Pakistan had made adequate preparations and was approaching the discussions with confidence. While refraining from predicting specific outcomes at this stage, he described the forthcoming exchanges with IMF representatives in Islamabad as substantive and constructive.
According to officials, the review will examine both quantitative performance indicators and structural reform commitments agreed upon under the programme. In addition to assessing compliance with established benchmarks, the IMF team is also expected to conduct a forward-looking evaluation of policy sustainability and reform momentum.
Recent macroeconomic indicators appear to have strengthened Pakistan’s case ahead of the review. The country recorded a primary fiscal surplus equivalent to 1.3 percent of gross domestic product (GDP) during fiscal year 2025, aligning with programme targets. This development has been cited as evidence of fiscal consolidation efforts gaining traction. Meanwhile, the State Bank of Pakistan has projected that inflation will remain within a 5 to 7 percent range over fiscal years 2026 and 2027, suggesting improved price stability compared to previous periods of volatility.
Foreign exchange reserves have also shown recovery, reaching $14.5 billion by the close of fiscal year 2025. Authorities aim to raise this figure to $18 billion by June, reflecting a strategy to strengthen external buffers and reduce vulnerability to external shocks.
Key policy areas are expected to dominate the review discussions. One major focus will be the management of circular debt in the energy sector, a long-standing structural challenge that continues to strain public finances. Electricity tariff adjustments implemented in recent months are likely to come under scrutiny, particularly in terms of their fiscal impact and social consequences.
The IMF team is also expected to examine progress on governance reforms, including implementation of recommendations outlined in the Governance and Corruption Diagnostic report. Additionally, the National Fiscal Pact — aimed at improving fiscal coordination between federal and provincial governments — will be part of the agenda. The framework for the federal budget covering fiscal years 2026 and 2027 will likely be evaluated to ensure consistency with agreed macroeconomic objectives.
Earlier statements from the IMF have acknowledged that policy measures undertaken by Pakistani authorities have contributed to stabilising the economy and restoring a degree of investor confidence. While challenges remain, the Fund’s remarks indicate recognition of reform efforts carried out under the programme.
Parallel to the IMF engagement, Pakistan’s economic diplomacy has also involved coordination with other multilateral institutions. In a separate development, World Bank Country Director for Pakistan Bolormaa Amgaabazar met Finance Minister Aurangzeb at the Finance Division to review progress under the Bank’s Country Partnership Framework (CPF).
The meeting focused on strengthening collaboration in priority sectors, including population management, human capital development, climate resilience, agricultural reform, and energy sector restructuring. Both sides examined the performance of ongoing projects within the World Bank’s portfolio and discussed ways to enhance effectiveness.
Aurangzeb underscored the importance of timely and efficient implementation of projects supported under the CPF, particularly in areas such as climate adaptation and demographic planning, which have long-term implications for sustainable growth. He stressed that coordinated efforts between federal and provincial authorities are essential to translate policy frameworks into tangible development outcomes.
Discussions also touched upon improving transparency in project design and reinforcing monitoring mechanisms to ensure accountability and measurable impact. The World Bank reaffirmed its commitment to working closely with Pakistan’s federal and provincial stakeholders, signalling continued support for structural reforms and development initiatives.
The convergence of IMF reviews and World Bank consultations reflects a broader phase in Pakistan’s economic management strategy — one that seeks to combine fiscal discipline, structural reform, and international cooperation. While the IMF assessment remains a critical milestone, the government appears intent on presenting a narrative of stabilisation and reform continuity.
Finance Minister Aurangzeb has emphasised that the review process is not merely about securing financial disbursements but also about reinforcing credibility and sustaining reform momentum. The coming weeks will therefore be pivotal, as policymakers navigate detailed negotiations that will influence Pakistan’s fiscal outlook and international financial standing.
If the reviews proceed smoothly and the anticipated funds are released, the additional inflow is expected to bolster reserves, strengthen investor confidence, and provide fiscal breathing space. However, sustained progress will depend on continued implementation of structural reforms, particularly in areas such as energy sector governance, public financial management, and intergovernmental fiscal coordination.
As discussions unfold in Karachi and later in Islamabad, attention will remain focused on whether Pakistan can maintain reform discipline while balancing growth considerations and social stability. The outcome of these engagements will likely shape the trajectory of the country’s economic recovery in the months ahead.