IMF Review to Assess Pakistan Economic Progress Amid Financial Challenges

The International Monetary Fund (IMF) review team is scheduled to visit Pakistan in the first week of March to evaluate the progress made under the $7 billion Extended Fund Facility (EFF).

This review is critical, as Pakistan will need to request waivers for unmet conditions and negotiate with IMF officials over the framework for the 2025-26 federal budget.

Pakistan has seen a decline in foreign loan disbursements, receiving $4.5 billion in the first seven months (July–January) of FY2024-25, compared to $6.7 billion during the same period the previous year. When including IMF funds, total inflows stood at $5.5 billion, which is still far below the projected $19 billion for the entire fiscal year.

The IMF's first review and approval of a $1 billion tranche is expected in April 2025. However, if a consensus is not reached, its release may depend on parliamentary approval of the budget.

The IMF review is occurring at a time when Pakistan’s current account has shifted from surplus to a deficit, with a $420 million shortfall recorded in January 2025.

Pakistan is likely to request waivers for missing deadlines related to the implementation of an Agriculture Income Tax (AIT), even though all four provincial assemblies have approved it.

Furthermore, legislative work on the Wealth Fund and the Asset Declaration Scheme remains unfinished. The Tajir Dost Scheme (TDS) has not yielded the anticipated outcomes, though the Federal Board of Revenue (FBR) has reported an increase in tax returns filed by retailers.