IMF praises Pakistan’s EFF programme for economic stability

The International Monetary Fund (IMF) highlighted Pakistan’s substantial progress under its Extended Fund Facility (EFF) programme, praising the country’s fiscal performance as “strong” and noting that it has helped stabilise the economy. This is in line with expectations from a recent review where the IMF staff team expects to discuss the third review for the EFF alongside the second review under the Resilience and Sustainability Facility (RSF).

IMF Communications Director Julie Kozack revealed at Thursday’s press briefing that Pakistan now boasts a primary fiscal surplus of 1.3% of gross domestic product (GDP) for fiscal year 2025, aligning with programme targets set initially. Headline inflation remains contained, and the country has enjoyed its first current account surplus in over a decade during the same period.

In addition to these positive developments, Kozack also mentioned the recent publication of the IMF’s Governance and Corruption Diagnostic Report for Pakistan, which includes recommendations for reforms such as simplifying tax policy design, enhancing public procurement transparency, and increasing asset declaration disclosures.

The review discussions under way will evaluate Pakistan’s adherence to the programme and decide on the next disbursements tied to reform benchmarks, including those stemming from the IMF’s Governance and Corruption Diagnostic Report. Federal authorities have already indicated that they are open to further technical assistance missions led by the IMF.

With the IMF team set to visit Karachi on February 25 for initial discussions with the State Bank of Pakistan, they will then proceed to Islamabad where talks with federal and provincial governments will commence on March 2 and conclude by March 11.

This continued focus on governance reforms underscores the IMF’s renewed commitment to tackling issues such as corruption and tax evasion, which have historically been managed outside of financial institutions. The success or failure in implementing these recommendations could determine whether Pakistan receives further technical assistance missions from the IMF, a prospect that federal authorities remain cautious about for now.