Pakistan, IMF Begin Formal Talks on EFF and Climate Programme Reviews
ISLAMABAD, PAKISTAN — WEB DESK: Pakistan and the International Monetary Fund have formally begun negotiations on the latest reviews of the country’s economic and climate-financing programmes, with around $1.2 billion in potential fresh disbursements linked to successful completion of the process.
The negotiations cover the fourth review of Pakistan’s $7 billion Extended Fund Facility (EFF) and the third review of the Resilience and Sustainability Facility (RSF). The IMF mission is led by Iva Petrova, while Finance Minister Muhammad Aurangzeb held a kick-off meeting with the visiting team.
The RSF is a separate climate-focused financing arrangement worth around $1.4 billion, designed to support measures that strengthen Pakistan’s resilience to climate-related risks.
Successful completion of the two reviews could put approximately $1.2 billion in financing within reach, although the money is not automatically released merely because negotiations have begun. A staff-level agreement and subsequent IMF processes would be required before associated disbursements could proceed.
The talks are expected to scrutinise Pakistan’s fiscal performance, revenue collection, structural reforms and implementation of commitments under the Fund-supported programmes. Earlier discussions also covered the economic consequences of continuing Middle East instability, which has created additional risks through higher energy costs and external-sector pressures.
One issue already attracting IMF attention is a reported Rs853 billion statistical discrepancy in federal and provincial budget data. Pakistan has assured the Fund that additional information will be provided to address concerns about the mismatch. Agriculture income-tax collection has also remained weak, at around Rs5 billion during the previous fiscal year, according to officials cited by The Express Tribune.
Earlier assessments showed that Pakistan had made progress on several fiscal and monetary indicators but faced shortcomings in some reform areas. The country missed a health and education spending target by around Rs370 billion, while the pace of reforms involving state-owned enterprises also remained an area of concern.
Climate-related reforms will form another component of the discussions. During its May visit, the IMF said work under the RSF included a disaster-risk financing framework, incorporating climate considerations into budget and investment planning, and reforms to power subsidies.
The May mission also said Pakistani authorities had reaffirmed their commitment to achieving a primary surplus of 2% of GDP in FY2027, alongside efforts to broaden the tax base, improve tax administration and increase spending efficiency.
The latest negotiations are therefore significant for both Pakistan’s near-term external financing and its wider reform programme. However, the start of formal talks should not be interpreted as confirmation that the reviews have been successfully completed or that the next financing tranche has been approved.
