IMF urges faster energy reforms as Pakistan flags easing debt pressure

September 30, 2026 (MLN): Pakistan has told the International Monetary Fund (IMF) that it expects to raise about $15bn in foreign financing this fiscal year against external debt obligations of roughly $21.5bn, while the Fund pushed Islamabad to move faster on energy-sector reforms and stay within agreed limits on circular debt.

Officials familiar with the matter said the discussion came up during the ongoing talks between the two sides.

They said the IMF wants quicker progress on reforms in the power and energy sector and firm adherence to the agreed circular debt targets.

Pakistan briefed the Fund on the reform work done so far, adding that the tense regional situation had put pressure on the sector.

Under its zero-inflow target, the government is aiming to hold circular debt at around Rs1.6tr.

On external financing, the government said the $21.5bn repayment figure for the year includes about $3.5bn in interest.

It also said $2.2bn has already been paid in July, made up of $1.4bn in Chinese commercial loans and $800mn in other obligations.

Islamabad expects the repayment burden to ease over the remaining 11 months, and that this year's bill would be around $5bn lower than last year's $26.5bn.

The government also outlined the steps taken to shore up foreign exchange reserves, including timely support from Saudi Arabia.

The State Bank of Pakistan (SBP) has bought around $28bn from the interbank market in the last three years, including about $9bn during FY2025-26.

The IMF also raised concerns over targets for income tax collection from the agriculture sector.

The federal government sided with farmers, arguing that rising production costs, driven by the regional situation, have left many of them financially stretched and that most cannot afford significant income tax liabilities.

Officials said provincial governments are taking steps to lift agricultural income tax collections and non-tax revenues to meet their fiscal surplus targets.

The Federal Board of Revenue (FBR) also briefed the Fund on its digitalization drive for tax collection, while details regarding efforts by provincial governments to increase non-tax revenue and targeted fiscal surpluses were also highlighted.

A special session on Pakistan's automobile policy is also scheduled between the two sides as part of the ongoing negotiations.

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