IMF Reviews Pakistan’s $7B EFF and $1.3B RSF Loan on May 9

The International Monetary Fund (IMF) Executive Board meets today, May 9, 2025, to review Pakistan’s $7 billion Extended Fund Facility (EFF) and approve a $1.3 billion Resilience and Sustainability Facility (RSF) loan, a pivotal moment with significant tax implications for businesses. Our tax law firm urges clients to prepare for Federal Board of Revenue (FBR) scrutiny as this IMF-driven funding unfolds.

The first review of the EFF, alongside a modification of performance criteria, could unlock $1 billion (SDR 760 million), bringing total disbursements to $2 billion, while the RSF offers $1.3 billion over 28 months to bolster climate resilience, per the text. Discussions led by Nathan Porter from February 24 to March 14, 2025, in Karachi and Islamabad, followed by virtual meetings, resulted in a staff-level agreement in March 2025, emphasizing macroeconomic stability, public finance strengthening, inflation reduction, and private-sector growth. Web sources like TechJuice confirm the IMF’s focus on structural reforms, but posts on X reflect mixed sentiment, with some questioning loan dependency.

From a tax law perspective, increased reserves may stabilize the rupee, impacting customs duties under Section 25 of the Customs Act for importers, while RSF funds could influence input tax credits under Section 8B of the Sales Tax Act, 1990, for climate projects. FBR audits may target foreign currency transactions, with withholding tax (WHT) at 15% on foreign payments under Section 6 of the Income Tax Ordinance requiring strict compliance. Taxable income adjustments under Section 29 may arise as private-sector growth accelerates.

Critically, the narrative of “stability” may overlook debt sustainability risks—web context highlights climate vulnerabilities, and X sentiment notes India’s opposition to the loan, potentially complicating fiscal outcomes. Clients must remain vigilant.

Our firm advises clients to monitor currency impacts, ensure WHT compliance, and prepare for FBR audits, navigating this evolving fiscal terrain.