Islamabad (Muddassar Iqbal) – The International Monetary Fund (IMF) has dispatched a second mission to Pakistan in just two months to assess the country’s progress on governance reforms and its efforts to eliminate corruption within key government institutions. This comes after the recent staff-level agreement that secured $2.3 billion in financing for Pakistan under the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF).
The IMF delegation, which began preliminary meetings this week, is set to start regular talks on Monday. Its primary objective is to evaluate the steps taken by Pakistan to enhance transparency, improve governance, and boost the performance of governmental institutions.
Sources within Pakistan’s Ministry of Finance have revealed that the mission will engage with over thirty government departments, including the Ministry of Finance, the State Bank of Pakistan, the Federal Board of Revenue (FBR), and the Planning and Privatization Commissions. High-level discussions will also take place with officials from the Auditor General’s office, the National Accountability Bureau (NAB), the Federal Investigation Agency (FIA), as well as regulatory authorities like the Oil and Gas Regulatory Authority (OGRA), the National Electric Power Regulatory Authority (NEPRA), and the Pakistan Telecommunication Authority (PTA).
Apart from governance reforms, the IMF mission will closely examine Pakistan’s competitive landscape in critical sectors like banking, construction, and sugar. The mission will also discuss legal and judicial reforms, with talks including registrars from the Supreme Court and accountability courts.
Focus on Fiscal Discipline and Structural Reforms
The mission arrives following the successful conclusion of a staff-level agreement between Pakistan and the IMF, which unlocked a $1 billion tranche of financing, pending approval by the IMF Board. The agreement also includes a new $1.3 billion arrangement under the Resilience and Sustainability Facility, bringing the total package to $2.3 billion.
In its statement, the IMF acknowledged Pakistan’s progress in stabilizing its economy, highlighting improvements in fiscal discipline, a reduction in inflation, and the stabilization of external balances despite global challenges. However, it also warned of continuing risks, including geopolitical tensions, fluctuating commodity prices, and climate-related challenges, all of which threaten Pakistan’s economic recovery.
Continued Reform Efforts Needed
The IMF emphasized the ongoing necessity for structural reforms, particularly in taxation, energy, and governance. The Fund called for an expanded tax base, especially through the effective implementation of agricultural income taxes, while recommending the gradual phase-out of energy sector subsidies.
In addition, the IMF advocated for a tighter monetary policy to keep inflation within a 5-7% range in the medium term. Pakistan’s government has reaffirmed its commitment to maintaining fiscal prudence and moving forward with reforms in taxation and energy efficiency.
While the IMF urged the government to make difficult decisions regarding fiscal and energy reforms, it also praised Pakistan’s commitment to protecting social welfare programs like the Benazir Income Support Programme (BISP). The government has pledged to prioritize spending on essential social services such as health, education, and climate resilience projects to ensure long-term stability.
Read more: IMF delegation arrives in Pakistan for corruption review
The IMF delegation’s engagement is expected to continue over the coming weeks, with the expectation that Pakistan will keep up the momentum on implementing crucial reforms, particularly in the energy sector, where the IMF has repeatedly called for tariff adjustments to address circular debt and improve efficiency.
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