Finance Division rejects claims of sole control over Pakistan’s IMF programme

September 23, 2026 (MLN): Pakistan’s IMF programme is a whole-of-government initiative involving multiple federal and provincial institutions, rather than a programme controlled solely by the Finance Division, the Ministry of Finance clarified.

The ministry said the IMF’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) cover reforms and commitments falling within the mandates of the Finance Division, Planning Commission/Ministry of Planning, Ministry of Energy, provincial governments, FBR, SBP and other relevant stakeholders.

Concerned ministries and institutions participate in and lead technical discussions, including the setting of benchmarks relating to their respective mandates, it said.

The ministry also clarified that the IMF programme is not confined to fiscal numbers or targets. It said macroeconomic stabilisation is a means towards sustainable and inclusive economic growth, while the published programme encompasses growth-enhancing structural reforms, social protection, governance, energy-sector efficiency, climate resilience and reduction of distortions in the economy.

The latest IMF staff report specifically states that policy discussions focused on accelerating reforms to support stronger growth while protecting vulnerable households, according to the ministry.

The Finance Division further rejected the assertion that the petroleum development levy (PDL) is the central point of the IMF programme, saying the programme’s fiscal strategy is substantially broader and revolves around FBR revenue mobilisation, expansion of the tax base, provincial taxation and expenditure rationalisation.

For FY27, the programme specifically emphasises additional revenue mobilisation and strengthening FBR performance rather than relying solely on petroleum taxation, while PDL is one of the revenue instruments, the ministry said.

On petroleum levy pricing, the ministry said the formulation that there is no IMF conditionality relating to petroleum levy pricing is technically narrow and potentially misleading.

While the programme does not prescribe a single permanent headline PDL rate, published programme documents contain specific details concerning petroleum pricing and levies, including alignment of domestic fuel prices with international prices through regular adjustments.

The RSF also includes a specific reform measure introducing a supplementary carbon levy through the PDL framework. Therefore, petroleum pricing policy forms part of the agreed programme framework rather than being a unilateral fiscal strategy developed solely by the Finance Division, it said.

The ministry also said linking PDL directly to inflation, unemployment, poverty and low growth is analytically incorrect, as broad macroeconomic outcomes reflect multiple factors, including the prevailing geopolitical situation, domestic and international commodity prices, exchange-rate movements, monetary conditions, fiscal imbalances, external financing constraints and global shocks.

It said fiscal stabilisation cannot credibly be separated from growth, noting that Pakistan entered the programme with limited fiscal and external buffers and significant financing requirements.

Restoring fiscal sustainability, rebuilding reserves and reducing refinancing risks are necessary conditions for durable private investment and growth, according to the ministry.

The IMF’s third-review documents record that fiscal consolidation contributed to reducing macroeconomic imbalances and demand pressures, supported disinflation and external-sector stabilisation through reserve build-up and recovery in overall growth numbers, it added.

The Finance Division also said fiscal consolidation has not been pursued without social safeguards. The programme incorporates explicit floors and commitments for social protection, including BISP targeted cash-transfer spending and inflation adjustment of unconditional cash-transfer benefits.

The latest targeted fuel-subsidy programme is another initiative aimed at protecting vulnerable households through targeted, temporary and fiscally sustainable interventions rather than untargeted subsidies that create large fiscal liabilities, the ministry said.

It further stated that sovereign debt is contingent on fiscal imbalance, while debt growth in the last financial year had been limited to the lowest levels in two decades.

On agriculture-related commitments, the ministry said these are not exclusively the responsibility of the Finance Division. Agricultural income taxation is constitutionally and administratively a provincial responsibility, with implementation necessarily involving provincial governments.

Any assessment of such reforms should therefore distinguish between programme coordination by the Finance Division and the constitutional and administrative responsibilities of the relevant governments and institutions, it said.

The ministry stressed that a distinction should be maintained between the Finance Division’s responsibility for overall programme coordination and agreement on benchmarks with the IMF, and the policymaking, legislative and implementation responsibilities of respective federal ministries and provincial governments.

It said the appropriate policy debate is how to transition from stabilisation towards sustainable growth without creating the fiscal and external imbalances that necessitated a return to IMF stabilisation programmes in the past.

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