The International Monetary Fund (IMF) on Saturday sent a second mission to Pakistan in just two months to assess progress in governance reforms and efforts to eliminate corruption across key government institutions.
The IMF delegation, which commenced preliminary meetings this week, is set to begin regular talks on Monday. Its primary objective is to evaluate the steps taken to enhance transparency, governance, and institutional performance.
Sources in the Ministry of Finance revealed that the IMF 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.
Meetings will also take place with officials from the Auditor General's office, the National Accountability Bureau (NAB), the Federal Investigation Agency (FIA), the Oil and Gas Regulatory Authority (OGRA), the National Electric Power Regulatory Authority (NEPRA), and the Pakistan Telecommunication Authority (PTA), among others.
In addition to governance reforms, the IMF mission will closely examine the competitive landscape in key sectors such as banking, construction, and sugar. Discussions will also involve registrars of the Supreme Court and accountability courts, as part of the broader focus on legal and judicial reforms.
Improvement in fiscal discipline
The mission's arrival follows the recent staff-level agreement between Pakistan and the IMF, which secured a $1 billion tranche of financing under the Extended Fund Facility (EFF), subject to approval by the IMF Board.
The agreement also includes a new $1.3 billion arrangement under the Resilience and Sustainability Facility (RSF), bringing the total financing package to $2.3 billion.
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In its statement, the IMF commended Pakistan's efforts to stabilize its economy, citing improvements in fiscal discipline, a reduction in inflation, and the stabilization of external balances despite global economic headwinds. However, the IMF also highlighted the continued risks posed by geopolitical tensions, fluctuating commodity prices, and climate-related challenges, which remain significant threats to Pakistan’s economic recovery.
Calls for continued reforms
The IMF has underscored the necessity of ongoing structural reforms, particularly in the areas of taxation, energy, and governance. The Fund stressed the importance of expanding the tax base, particularly through the effective implementation of agricultural income taxes, while gradually phasing out energy sector subsidies.
Moreover, the IMF has called for a tighter monetary policy to keep inflation within a 5-7% range in the medium term. The Pakistani government has reaffirmed its commitment to maintaining fiscal prudence and pushing forward with structural reforms, including efforts to broaden the tax base and reduce energy sector inefficiencies.
While the IMF has urged the government to make tough decisions regarding fiscal and energy reforms, it also recognized Pakistan’s commitment to protecting social welfare programs, including the Benazir Income Support Programme (BISP). The government has pledged to prioritize spending on health, education, and climate resilience projects, which are essential to ensure long-term social and economic stability.
The IMF’s delegation will continue its engagements in the coming weeks, with the expectation that the government will maintain momentum on implementing crucial reforms, especially in the energy sector, where the IMF has repeatedly called for tariff adjustments to address circular debt and improve overall efficiency.
