Pakistan and the International Monetary Fund (IMF) are moving closer to a staff-level agreement (SLA) following extensive talks on fiscal discipline, monetary policy, and structural reforms. The progress comes as both sides completed discussions on the second review under the Extended Fund Facility (EFF) and the first review under the Resilience and Sustainability Facility (RSF).
An IMF delegation led by Iva Petrova visited Karachi and Islamabad from September 24 to October 8, 2025, holding in-depth consultations with Pakistani authorities. The mission focused on macroeconomic stability, energy sector reforms, and anti-corruption measures vital for long-term economic sustainability.
Significant Progress Reported in IMF Mission
According to Petrova, Pakistan’s economic programme implementation remains strong and aligned with agreed policy commitments. She noted that the discussions achieved meaningful progress in several areas, including fiscal consolidation, monetary tightening, and energy sector restructuring.
She emphasized that maintaining a data-driven monetary policy will help keep inflation within the State Bank of Pakistan’s target range, while regular energy tariff adjustments and cost-cutting reforms are essential for restoring the sector’s viability.
The IMF also highlighted the need for structural reforms to reduce the state’s footprint in the economy, strengthen governance and transparency, and promote a competitive business environment. Additionally, the mission discussed the completion of climate resilience reforms under the RSF, reflecting Pakistan’s ongoing commitment to sustainability.
Focus on Policy Implementation and Flood Recovery Support
The IMF recognized Pakistan’s continued fiscal discipline despite challenges, stressing that the country must sustain fiscal consolidation to strengthen public finances while still providing flood recovery assistance to affected communities. Productive discussions were held on policy initiatives to enhance governance, transparency, and climate resilience.
Petrova expressed sympathy for the victims of recent floods and thanked the government, private sector, and development partners for their collaboration and hospitality during the mission.
Pending Reviews and Economic Reforms
Pakistan and the IMF concluded review talks on Wednesday for the $7 billion EFF and the $400 million first tranche of the $1.4 billion RSF. Both sides are now finalizing technical details before signing the SLA.
However, the IMF set a deadline for Pakistan’s Economic Coordination Committee (ECC) to approve key reforms this month. These include the abolition of two vehicle import schemes and the tightening of transfer-of-residence regulations to curb misuse. Under the revised policy, vehicles can only be imported from countries where individuals have resided for at least one year.
Officials acknowledged that many cars from Japan and the UK are first imported through Dubai before entering Pakistan, a loophole that authorities are now determined to close.
Governance and Anti-Corruption Framework Under Review
A major focus of the ongoing talks is the Governance and Corruption Diagnostic (GCD) Assessment report, which remains a sticking point between the two sides. Pakistan’s government has formed a task force to review its anti-corruption framework and align it with IMF recommendations.
The task force proposed several key reforms, including:
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Mandatory asset declarations for civil servants (Grade 17–22) and their spouses.
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Amendments to the Civil Servants Act (1973) to allow public disclosure of assets and liabilities.
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Inclusion of non-elected advisers and special assistants under mandatory asset declaration laws.
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Amendments to the NAB Ordinance and FIA Act to define clear mandates and ensure effective coordination between agencies.
Further recommendations include training programs for anti-corruption officers, technology-driven investigations, and enhanced cooperation among the FIA, NAB, and provincial anti-corruption establishments. The task force also advised on public awareness campaigns promoting transparency and citizens’ rights under the Right to Information Act.
Strengthening Institutional Capacity and Oversight
The report emphasized the importance of appointing Chief Internal Auditors in all ministries as per the Public Finance Management Act (2019) and ensuring compliance with the State-Owned Enterprises (Governance and Operations) Act (2023). It also suggested open merit-based appointments of prosecutors and judicial members to enhance accountability in corruption cases.
Moreover, the recommendations called for establishing a central coordination forum for intelligence sharing, forensic assistance, and jurisdictional clarity. These steps aim to build a transparent governance model and align Pakistan’s institutions with international standards.
Pakistan’s steady reform progress and IMF collaboration signal cautious optimism for economic recovery. The upcoming staff-level agreement is expected to unlock crucial financing under the EFF and RSF, supporting fiscal stability, climate resilience, and sustainable growth.
With a focus on governance, monetary discipline, and inclusive reforms, Pakistan appears to be on a clearer path toward macroeconomic stability and international confidence restoration.
