ISLAMABAD: A review mission of the International Monetary Fund concluded its visit to the federal capital after expressing overall satisfaction with Pakistan’s macroeconomic progress under ongoing programmes, while flagging medium-term downside risks, The News reported on Tuesday.
The IMF team, led by Ms Iva Petrova, held a plenary session with Finance Minister Muhammad Aurangzeb and his economic team on Monday morning. It was decided that further negotiations on the third review of Pakistan’s Extended Fund Facility (EFF) and the second review of the Resilience and Sustainability Facility (RSF) would continue virtually from Turkey.
In a brief statement, the IMF said its mission had initiated discussions in Karachi and Islamabad on the reviews under the EFF and RSF arrangements, adding that talks would continue online.
According to sources, the Fund expressed satisfaction with Pakistan’s macroeconomic performance but raised concerns over delays in achieving certain agreed targets. These included the revenue shortfall of the Federal Board of Revenue (FBR), implementation of the external financing plan, and legislative amendments related to state-owned enterprises and sovereign wealth funds.
The Pakistani side informed the mission that macroeconomic and fiscal stability was gradually strengthening, supported by fiscal discipline and the rebuilding of foreign exchange reserves to required buffer levels.
Discussions also covered FBR performance, the fiscal outlook for the current financial year, and progress in maintaining fiscal discipline by year-end. Virtual talks are expected to further examine decisions taken by the government’s rightsizing committee aimed at reducing the size of the federal government and curbing expenditures.
Officials shared that the federal government currently operates 441 departments under 39 ministries, with rightsizing reforms underway in 20 ministries. Around 54,000 posts are expected to be abolished by the end of 2025, generating estimated annual savings of Rs56 billion to be reflected in upcoming budgets.
During the meeting, Finance Minister Aurangzeb underscored that since the completion of the previous review, Pakistan had consolidated hard-earned gains in macroeconomic stability achieved under the EFF and RSF programmes. He reiterated the government’s commitment to fiscal discipline and safeguarding macroeconomic stability through sustained reforms.
He highlighted that structural reforms in taxation and the energy sector remained central to the reform agenda, noting that comprehensive transformation in tax administration — covering improvements in human resources, processes and technology — was underway. He added that steps had been taken to fully operationalise the Tax Policy Office to ensure future tax policy is guided by sound economic principles.
On privatisation and state-owned enterprise reforms, the minister reaffirmed the government’s resolve to advance key transactions and restructuring initiatives during the year in a transparent manner. He observed that recent developments indicated growing investor confidence and renewed appetite among domestic investors.
Aurangzeb also briefed the mission on progress in right-sizing the federal government, including the merger of ministries and closure of certain entities to improve efficiency and governance.
Reiterating the government’s export-led growth strategy, he said trade facilitation measures and tariff rationalisation were being pursued to enhance competitiveness and reduce import dependency over time.
The minister apprised the mission of the government’s response to flood-related challenges during the fiscal year, stating that fiscal buffers enabled timely rescue and relief efforts and enhanced resilience against external and climate-related shocks.
While pointing to signs of gradual economic recovery, he acknowledged emerging global challenges, including geopolitical developments and volatility in international energy markets. He informed the IMF mission that a high-level committee had been constituted to closely monitor the evolving situation and ensure coordinated policy responses.
He further emphasised that while stabilisation measures were necessary, the government remained committed to protecting vulnerable segments of society through enhanced social spending.
Ms Iva Petrova appreciated the comprehensive briefing and shared insights from the mission’s discussions in Karachi. Both sides agreed to continue deliberations virtually in the coming days. The meeting was attended by State Bank of Pakistan Governor Jameel Ahmad, the finance secretary, FBR chairman and senior officials of the Finance Division.