IMF Releases Fresh Tranche After Pakistan Progress
Karachi: Pakistan has successfully achieved the targets set by the International Monetary Fund (IMF). The country continues to implement its loan and reform program with the IMF and has recently received another tranche of funding from the lender. According to economic analysts, Pakistan’s continued implementation of the IMF program reflects ongoing reforms and improvements in the country’s economy.
In its analysis of the program, AKD Securities stated that the IMF, by releasing the latest tranche, has acknowledged that the Pakistani government is implementing the 37-month Extended Fund Facility (EFF) program in line with its commitments. The IMF noted that Pakistan achieved all seven performance criteria and six out of eight indicative targets by December 2025. However, two targets related to net tax revenue collection by the Federal Board of Revenue (FBR) and tax collection from retailers could not be achieved. Most of the continuous and structural benchmarks, as well as reform measures set for the second review, were also completed successfully. Following this progress, the IMF has so far disbursed a total of SDR 3 billion under the EFF and the Resilience and Sustainability Facility.
In light of rising regional and global geopolitical tensions, the scope for increasing foreign exchange reserves has become limited. The targets set by the IMF indicate that the Fund recognizes these challenges and aims to continue reserve accumulation at a relatively slower pace during the program period. Under the program, the government is required to reduce inflationary pressures, maintain fiscal discipline, and increase revenue collection. Enhancing domestic revenue remains critical for achieving the program’s objectives, especially as persistent weaknesses have been observed in this area. Therefore, special focus is being placed on improving FBR’s net tax collections.
As part of the ongoing review of the loan program, the IMF has introduced eleven new targets aimed at improving fiscal governance and economic management. These include approval of the FY2027 budget, improvement in revenue administration, strengthening anti-corruption measures and transparency in public procurement, continuing regular adjustments in gas and electricity tariffs, developing a framework for foreign exchange liberalization, and enhancing regulatory transparency.
To achieve the FY2027 target of a 2 percent primary surplus, Pakistan will need to generate additional revenue equal to 0.6 percent of GDP. At the federal level, revenue growth equivalent to 0.3 percent of GDP should come through effective implementation of the FBR restructuring plan and expenditure rationalization. At the provincial level, emphasis has been placed on broadening the tax net in the services sector and implementing agricultural income tax. The IMF has also recommended allocating a contingency fund of PKR 359 billion in FY2027 to cushion the economy against potential shocks from the Middle East.
