Business & Finance

Pakistan, IMF End Discussions on $7bn EFF and $1.4bn RSF Reviews

By Tahir Amin

ISLAMABAD – Pakistan and the International Monetary Fund (IMF) finished talks that ran from September 23 to October 7 on the fourth review of the USD 7 billion Extended Fund Facility (EFF), the third review of the USD 1.4 billion Resilience and Sustainability Facility (RSF) and an Article IV consultation, official sources said. The IMF mission, led by Iva Petrova, held intensive discussions with Pakistani authorities on economic performance, fiscal consolidation, revenue mobilisation, energy‑sector reforms, external financing requirements and structural benchmarks under the ongoing programme. The talks concluded on Wednesday. Sources said the negotiations largely focused on addressing earlier programme slippages and firming up policy commitments for the remainder of the programme. The IMF maintained pressure on Pakistan to strengthen fiscal discipline, contain energy‑sector circular debt and accelerate reforms aimed at replacing broad‑based subsidies with targeted support for vulnerable consumers. A key area of discussion was the proposed shift of electricity subsidies for poor consumers from tariff‑based support to targeted cash assistance through the Benazir Income Support Programme (BISP). The Fund also raised concerns over the breach of the power‑sector circular debt target, which stood at around Rs1.675 trillion at end‑June 2026, and sought measures to prevent further accumulation. The gas sector remained another major area of concern, with circular debt estimated at around Rs3.6 trillion. Pakistan agreed to accelerate work on targeted gas subsidies and measures to contain the build‑up of arrears while protecting low‑income consumers. On the revenue side, sources said the IMF has kept the Federal Board of Revenue (FBR) annual tax collection target unchanged at Rs15.264 trillion after the tax machinery exceeded its first‑quarter target. The focus would now be on ensuring achievement of the half‑yearly revenue target and maintaining the required pace of tax mobilisation during the remaining months of the fiscal year. The IMF also pushed for a more realistic assessment of Pakistan’s external financing requirements amid regional uncertainty and elevated energy prices. The financing, however, remains subject to approval by its Executive Board. At the time of filing, neither the IMF nor the Finance Ministry had issued an official statement on the conclusion of the talks.