IMF mission due on Sept 23 for biannual review of Pakistan’s economic performance

An IMF mission is set to arrive in Pakistan on September 23 for a biannual assessment of the nation's economic progress and compliance with a $7 billion Extended Fund Facility (EFF) and a $1.4 billion Resilience and Sustainability Facility (RSF). These funds are allocated for the period ending June 30, 2026. The country currently operates under an IMF program aimed at stabilizing the economy through fiscal discipline, structural reforms, and long-term growth measures.

The IMF mission, led by Iva Petrova, will conduct the fourth review of the EFF and the third review of the RSF during its two-week visit, concluding in early October. The team will kick off its journey with technical discussions at the State Bank of Pakistan, followed by consultations with government sectoral teams and a typical opening meeting with Finance Minister Muhammad Aurangzeb.

The review will scrutinize policy execution at the onset of the fiscal year, with particular focus on the Federal Board of Revenue's (FBR) capacity to meet its first-ever half-yearly revenue collection benchmark under the IMF program. Pakistan's provincial governments have recently transferred more than Rs1.035 trillion of their National Finance Commission (NFC) shares to the central government for national security and water resources, adding to the Rs1.8 trillion cash surplus pledged under IMF pressure.

Overall, the performance against fiscal targets as of June 2026 has mostly been on track; however, significant revenue shortfalls and deviations in the policy matrix have been observed. The government's intervention in commodity operations, especially wheat and sugar, contravened an IMF condition prohibiting government interference in the commodities market.

Upon successful completion of the review, Pakistan will be qualified for the disbursement of approximately $1 billion (760 million Special Drawing Rights) under the EFF and an additional $200 million under the RSF by the end of November or early December. While qualitative performance criteria on the fiscal and monetary fronts have been largely satisfactory, progress on economic governance reforms has fallen short of the required standards.

Only a few targets out of more than three dozen for enhancing economic governance during January-June 2026 have been achieved. These targets were established by the prime minister following the IMF's governance and corruption diagnostic evaluation, which revealed substantial deficiencies in anti-corruption efforts. Despite introducing reforms for transparent procurement processes in state-owned entities, the government has continued to grant direct contracts to SOEs without competitive bidding.

Furthermore, agencies have been issuing tenders after project completion by preferred contractors, undermining competitive pricing and transparency.