IMF Review Talks Kick Off for Pakistan’s $7 Billion Loan and RSF
Islamabad — An International Monetary Fund (IMF) mission formally began its review of Pakistan’s economic program, focusing on the $7 billion Extended Financing Facility (EFF) and the $1.1 billion Resilience and Sustainability Facility (RSF). The talks mark the start of a two-week mission aimed at assessing performance under the program and identifying corrective steps ahead of the December targets. The mission is led by IMF Pakistan Mission Chief Iva Petrova and met with Pakistan’s delegation headed by Finance Minister Muhammad Aurangzeb. The opening session also included senior officials such as the State Bank of Pakistan (SBP) governor, the finance secretary, and the Federal Board of Revenue (FBR) chairman.
A Mixed Performance as of End-June 2025
According to local reports, the program’s performance through the end of June 2025 has been mixed. While the power sector benchmarks were broadly satisfied, overall revenue collection fell short by about ₹1.2 trillion — roughly 1% of GDP — in the last fiscal year, with the shortfall continuing into the first two months of the current year. This mixed performance means the IMF and Pakistani authorities will need to agree on corrective measures during the talks to bring the program back on track for the biannual targets.
Revenue collection and fiscal discipline under scrutiny
The revenue gaps underscore persistent challenges in tax administration and collection efficiency. The authorities will likely discuss measures to broaden the tax base, improve compliance, and close loopholes while protecting essential social spending. How the government closes this gap is crucial not only for program credibility but also for maintaining investor confidence as Pakistan navigates external financing needs.
Power sector progress and lingering gaps
On the upside, the energy sector’s performance meets existing benchmarks, reflecting targeted reforms and stabilization efforts in electricity tariffs, subsidy design, and tariff collection. However, broader fiscal reforms remain essential to ensure that lower inflation and stable energy costs translate into sustainable fiscal outcomes.
RSF Policy and Brownfield Refinery Upgrades
Pakistan is also pressing ahead with a long-delayed brownfield petroleum refinery policy. Officials argue that implementing this policy could unlock roughly $6 billion in fresh investment for refinery upgrades, aligning with the RSF’s objectives by producing petroleum products that meet European standards with reduced carbon and sulphur emissions. The stalled reform has become a focal point of the dialogue, with the IMF seeking assurances that investment incentives will translate into tangible environmental and economic benefits.
Forward-Looking Discussions and Next Steps
The talks will be forward-looking, emphasizing faster implementation of the program’s end-December 2025 targets. Pakistan’s side is expected to present a roadmap detailing concrete actions to boost revenue, accelerate reform implementation, and ensure that the RSF and EFF commitments are met. The IMF team, in turn, will assess the feasibility of these measures, provide technical guidance, and set the ground for the next biannual review.
Implications for Economic Stability and Investor Sentiment
Analysts see the mission as a test of Pakistan’s policy discipline amid a challenging macro picture, with external financing needs and a fragile balance of payments backdrop. A credible path forward, anchored by credible revenue reforms and timely energy policy actions, could help stabilize sentiment and support continued access to international financing. The outcome of this round of discussions will influence both near-term policy choices and long-term investor confidence in Pakistan’s economic trajectory.
Conclusion: The Road Ahead
As the IMF mission reviews performance through the first half of 2025 and calibrates corrective measures, Pakistan faces the dual task of boosting revenue while sustaining growth and social spending. The next two weeks will shape the pace of reforms, the timing of policy adjustments, and the prospects for meeting the December 2025 milestones that underpin the broader financial program.
