Pakistan, IMF formally begin talks on EFF, climate programme reviews

Finance Minister Muhammad Aurangzeb opened discussions with an IMF mission on Tuesday, according to The Express Tribune. The Fund's team, led by Iva Petrova, is in Islamabad to assess the fourth review of the Extended Fund Facility and its third review under the Resilience and Sustainability Fund. The finance ministry flagged the meeting on X. Back in September the IMF board had approved the 37-month, $7 billion EFF after Pakistan committed to changes in agriculture income tax, provincial fiscal duties and subsidy limits.

Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the margins of the 81st UN General Assembly last week, where he described Pakistan's pressures and hardship for low-income households. He told The Express Tribune the Fund had not voiced serious concerns about the Rs100 per litre targeted subsidy. If both reviews are completed, the country could receive roughly $1 billion from the main programme and $200 million from the climate window, about $1.2 billion in total.

According to sources cited by the newspaper, the Fund remains worried about slow reforms in state-owned enterprise governance, ongoing market interventions and budget transparency. It has also flagged Rs853 billion in statistical discrepancies, while the government beat its primary surplus target. Pakistan also missed a condition on combined health and education spending by five governments, falling Rs370 billion short of the Rs3.47 trillion target.