IMF Mission sees 'Significant Progress' in Pakistan's economic reforms

October 09, 2025 (MLN): The International Monetary Fund (IMF) and Pakistani authorities have made "significant progress" toward a crucial Staff Level Agreement (SLA) following the conclusion of a two-week mission in Islamabad and Karachi.

The positive tone of the End-of-Mission Statement signalled strong program implementation and continued momentum in Pakistan's economic reform agenda.

The IMF team, led by Iva Petrova, visited Pakistan from September 24 to October 8, 2025, to discuss the second review under the Extended Fund Facility (EFF) and the first review under the new Resilience and Sustainability Facility (RSF).

In her concluding statement, Ms Petrova noted that program implementation remains "strong, and broadly aligned with the authorities’ commitments."

Discussions made headway in several critical areas, underscoring the government's commitment to tough but necessary reforms:

• Fiscal Stability: Authorities made progress on sustaining fiscal consolidation, strengthening public finances, while simultaneously managing to provide essential support for ongoing flood recovery efforts.

• Monetary Policy: The mission noted progress in ensuring inflation remains durably within the State Bank of Pakistan’s target range. This is being achieved by maintaining an "appropriately tight and data-dependent monetary policy."

• Energy Sector Viability: Significant steps were taken to restore the health of the ailing energy sector through the implementation of regular tariff adjustments and cost-reducing reforms.

• Structural Reforms: Progress was cited in advancing deep-seated structural changes intended to reduce the state's economic footprint, strengthen governance and transparency, foster a more competitive business environment, and liberalize commodity markets.

• Climate Resilience: Productive discussions were also held on the authorities’ reform agenda to strengthen climate resilience, which is supported by the new RSF arrangement.

The IMF team and Pakistani authorities will continue policy discussions to resolve any remaining outstanding issues.

The successful conclusion of these reviews is a vital step toward the disbursement of the next tranche of funds, which will bolster Pakistan’s foreign reserves and support its economic stability.

Ms Petrova also expressed the IMF team's sympathy to those affected by the recent floods and thanked the Pakistani authorities and private sector for their fruitful discussions and hospitality during the mission.

Yesterday, the Fund shared the draft Memorandum of Economic and Financial Policies (MEFP) with Pakistan’s Ministry of Finance as part of the ongoing discussions for a staff-level agreement under the current bailout program.

Finance Minister Muhammad Aurangzeb, speaking informally with the media on Wednesday, confirmed that Pakistan has met all performance targets outlined by the IMF.

He expressed optimism that once the MEFP is signed, both sides will move swiftly toward formalizing the agreement.

“The discussions are on track, and consensus has been achieved on all major targets,” Aurangzeb said.

The finance minister reiterated Pakistan’s commitment to fulfilling all obligations under the Fund-supported program.

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