Kick-off in Islamabad: IMF Review Opens Focus on a $7 Billion EFF and RSF
An IMF mission formally kicked off its review of Pakistan’s economic program, meeting with the country’s economic team to assess progress on the $7 billion Extended Financing Facility (EFF) and the $1.1 billion Resilience and Sustainability Facility (RSF). The talks mark a critical checkpoint for Islamabad’s reform path and its readiness to meet the program’s biannual targets. The mission, led by Pakistan’s Mission Chief Iva Petrova, held a first session with Finance Minister Muhammad Aurangzeb and was joined by the governor of the State Bank of Pakistan, the finance secretary, and the Federal Board of Revenue (FBR) chairman. The discussions are set to continue for almost two weeks, with the aim of identifying corrective measures and accelerating implementation where needed.
According to a Dawn report cited in local media, the opening session underscored the bilateral intent to align on a path that sustains macro stability while ensuring social and economic priorities are not compromised. The review will cover the performance of the program through end-June 2025 and will inform how the authorities and the IMF chart forward steps through December 2025. While the initial phase has seen progress in some areas, officials and observers are watching revenue mobilization and structural reforms closely as the two sides outline a roadmap for the next review period.
Performance Snapshot: Mixed Signals for Revenue and Growth
Officials say the program’s performance as of end-June 2025 has been mixed. One of the most pressing concerns is revenue collection, which has fallen short by roughly ₹1.2 trillion — about 1% of GDP — across the last fiscal year. The first two months of the current fiscal year have shown a similar shortfall, complicating efforts to meet revenue and fiscal targets. In contrast, the power sector benchmarks for the same period were reported to be comfortably met, illustrating a mixed profile of progress across different reform areas.
These developments create pressure on both sides to agree on corrective actions that can be implemented ahead of the next biannual targets. The talks focus on policy adjustments and administrative reforms designed to shore up revenues while protecting essential public services. The IMF’s assessment will likely influence the pace and sequencing of reforms, as well as accompanying measures to stabilize the external accounts and preserve debt sustainability.
RSF Focus and the Brownfield Refinery Policy
A notable element of the discussions is Pakistan’s push to resolve a long-delayed brownfield petroleum refinery policy, which has stalled roughly $6 billion in fresh investment for refinery upgrades. Officials tell the IMF that upgrading refinery capacity and ensuring the production of petroleum products that meet European standards — with lower carbon and sulfur emissions — aligns closely with RSF objectives. This alignment is seen as pivotal for both environmental and energy-security goals, potentially unlocking new investment while supporting the broader reform agenda. The policy debate sits at the intersection of energy pricing, environmental standards, and industrial modernization, all of which are central to Pakistan’s macroeconomic strategy and the program’s RSF components.
Looking Ahead: What to Expect in the Remaining Review Window
Over the coming days, the IMF mission will engage in forward-looking discussions aimed at accelerating the implementation of the December 2025 targets and clarifying the program’s course through the December review. The dialog will likely cover revenue administration improvements, tax policy measures, and further structural reforms to streamline public finance management. The objective is to deliver a credible plan that can restore revenue momentum, support financial stability, and maintain the program’s overall credibility with international lenders and markets.
For Pakistan, the review is a test of its reform resolve and its capacity to balance fiscal consolidation with inclusive growth. The outcome will influence policy continuity, donor confidence, and the trajectory of key macroeconomic indicators in the months ahead. While challenges remain, the ongoing talks reflect a shared commitment between Pakistan and the IMF to strengthen macroeconomic resilience and sustain a path toward sustainable development.
Conclusion: A Pivot Point for Pakistan’s Economic Reform Journey
As the IMF mission continues its two-week stay, the main task is to translate an uncertain revenue trajectory and evolving energy policy into a concrete reform roadmap. If the corrective measures are well-calibrated and implemented promptly, Pakistan could stabilize its fiscal position and proceed with critical investments that support long-term growth and energy efficiency. The stakes are high, but the talks also offer a structured framework for progress, a clearer signal to markets, and a chance to advance Pakistan’s reform agenda in a challenging external environment.
