Pakistan, IMF Begin Formal Talks on EFF and Climate Programme Reviews

Pakistan and the International Monetary Fund (IMF) have formally begun discussions for the fourth review of the $7 billion Extended Fund Facility (EFF) and the third review of the $1.4 billion Resilience and Sustainability Facility (RSF).

 

Finance Minister Muhammad Aurangzeb held a kick-off meeting with the IMF mission in Islamabad on Tuesday. The mission is being led by Iva Petrova of the IMF’s Middle East and Central Asia Department.

 

Successful completion of both reviews could unlock around $1.2 billion in financing for Pakistan, comprising roughly $1 billion under the EFF and $200 million through the climate-focused RSF programme. The reviews are also expected to feed into a comprehensive Article IV assessment of Pakistan’s economy.

 

The IMF is assessing Pakistan’s macroeconomic and external-sector outlook amid the ongoing Middle East conflict and its impact on energy prices, external financing and the broader economy. Earlier IMF reviews have also focused on fiscal consolidation, energy-sector reforms, state-owned enterprises and structural measures.

 

Officials are expected to face questions over implementation of several programme commitments. These include concerns about governance reforms for state-owned enterprises, market interventions and transparency in government accounts.

 

The IMF has also raised concerns over an Rs853 billion statistical discrepancy in the accounts of federal and provincial governments for FY2025-26. Pakistan is expected to provide additional details to explain the mismatch during the talks.

 

Another issue is spending on health and education. The five governments collectively fell short of a programme condition requiring Rs3.47 trillion in spending, with the shortfall reported at around Rs370 billion.

 

The outcome of the discussions will determine whether the reviews can proceed towards IMF Executive Board consideration and potential release of the next financing tranches.