The International Monetary Fund has wrapped up its latest on-site review of Pakistan’s economic programme, expressing satisfaction with recent stabilisation gains while warning that unresolved structural weaknesses pose medium-term risks, according to officials familiar with the discussions.
The IMF review mission concluded meetings in Islamabad earlier this week and returned from the federal capital amid growing regional security concerns.
Authorities confirmed that remaining negotiations under Pakistan’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) will continue through virtual engagements from Turkey.
During a high-level plenary session with Finance Minister Muhammad Aurangzeb and senior members of the economic team, the IMF acknowledged progress in macroeconomic stability, fiscal consolidation, and the rebuilding of foreign exchange reserves.
However, the mission underlined that Pakistan’s growth momentum cannot be sustained without accelerating long-pending structural reforms.
Sources said the IMF raised red flags over delays in meeting several agreed benchmarks, particularly the Federal Board of Revenue (FBR) revenue shortfall, slow implementation of the external financing plan, and stalled legislative changes concerning state-owned enterprises (SOEs) and sovereign wealth fund regulations.
Pakistani officials told the mission that strict fiscal discipline has helped stabilise public finances and restore confidence in the economy. They highlighted that improved reserve buffers have enhanced the country’s ability to absorb external shocks and manage balance-of-payments pressures.
The IMF review also examined progress on the government’s rightsizing agenda, which aims to reduce the cost of governance by restructuring ministries and cutting redundant posts. Officials revealed that Pakistan currently operates 441 departments under 39 federal ministries, with reform efforts actively underway in at least 20 ministries.
Under the rightsizing plan, around 54,000 government positions are expected to be eliminated by the end of 2025, generating annual savings estimated at Rs56 billion. These savings are expected to be reflected in upcoming federal budgets.
Finance Minister Aurangzeb reaffirmed the government’s commitment to tax system reforms, particularly improvements in tax administration through better use of technology, streamlined processes, and stronger institutional oversight.
He noted that the full operationalisation of the Tax Policy Office would ensure future tax measures align with economic fundamentals and growth objectives.
On privatisation and SOE reform, the minister assured the IMF that key transactions and restructuring initiatives would move forward in a transparent and orderly manner, citing renewed investor interest as a sign of growing confidence in Pakistan’s reform trajectory.
The discussions also covered Pakistan’s export-led growth strategy, trade facilitation measures, and tariff rationalisation efforts aimed at boosting competitiveness and reducing long-term import dependence.
Officials briefed the IMF on the government’s response to recent flood-related challenges, noting that improved fiscal buffers enabled timely relief operations.
While recent economic indicators point to a gradual recovery, the IMF and Pakistani authorities acknowledged rising global risks, including geopolitical instability and international energy price volatility, which could impact the country’s outlook.
Both sides agreed to continue technical discussions virtually in the coming days to complete the ongoing programme reviews.
