Pakistan shows strong compliance with IMF EFF benchmarks

May 20, 2025 (MLN): Pakistan has met all seven quantitative performance criteria and five of eight indicative targets under the IMF’s Extended Fund Facility (EFF) program as of the end of December, according to the IMF report.

The IMF’s latest review of the 37-month program, which began in September 2024, highlighted Pakistan’s timely and strong implementation as vital for sustaining economic stability and promoting long-term growth.

The report noted improvements in financial and external conditions, with a current account surplus recorded in the first eight months of FY25 and foreign exchange reserves surpassing expectations.

Inflation has declined to historic lows, although core inflation remains relatively high at around 9%.

While economic recovery continues, growth in the first half of FY25 has been slower than initially projected.

Fiscal targets are largely on track, especially the achievement of a primary surplus.

However, the IMF urged Pakistan to pursue further reforms aimed at increasing revenue collection, reducing debt levels, and creating fiscal space for social and development expenditures.

The Fund also recommended maintaining a tight, data-driven monetary policy alongside a flexible exchange rate to aid in rebuilding reserves.

Energy sector reforms were emphasized, particularly the need for timely tariff adjustments to ensure cost recovery and lower sector expenses.

The IMF also called for deeper structural reforms to enhance governance, trade, and the investment climate in order to foster inclusive growth.

Looking ahead, the IMF proposed that Pakistan enter into an arrangement under the Resilience and Sustainability Facility (RSF) with access to SDR 1 billion (49.2% of quota).

This initiative aims to bolster Pakistan’s balance of payments resilience against climate risks by supporting reforms focused on disaster preparedness, water resource management, intergovernmental coordination, and climate-related risk disclosure by banks and corporates.

The RSF will also assist Pakistan in meeting its climate mitigation commitments.

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