IMF shares draft Memorandum of Financial and Economic Policies as Pakistan talks enter final stretch

The International Monetary Fund has passed the first draft of its Memorandum of Financial and Economic Policies to Pakistani officials, according to The News, moving review talks toward the steps needed for a staff-level agreement. The Fund's review team is set to remain in the capital until roughly mid next week. If both sides accept the document, a staff-level agreement could follow, while open issues could continue online after the mission departs.

Among the matters raised, the Fund voiced concern that the power sector has breached its circular debt target, with the stock at Rs1.675 trillion at the close of June 2026. It has also asked the government to end cross-subsidies on power used up to 200 units, swapping these for targeted assistance routed through BISP from January 2027. On the revenue side, the FBR's annual target of Rs15.264 trillion stays unchanged, while the authority beat its first-quarter goal by Rs27 billion.

A current account deficit gap also stands out, as the IMF pushes for up to $4 billion in FY27 against the Finance Ministry's estimate of about $2.7 billion. The Annual Plan 2026-27, endorsed by the National Economic Council, puts the deficit at roughly $3.6 billion. Officials expect GDP growth near 4% and CPI inflation of 8.2%, while the IMF sees average inflation between 8.5% and 9.5%.