ISLAMABAD: Pakistan has made significant progress toward reaching a staff-level agreement with the International Monetary Fund (IMF) under the Extended Fund Facility and the Resilience and Sustainability Facility, according to official sources.
Sources said the IMF has shared a draft of the Memorandum of Economic and Financial Policies (MEFP) with the government. The agreement is expected once both sides finalize and agree on the draft. The Ministry of Finance has circulated the document among relevant ministries and departments for review, and consultations are ongoing.
After consensus is reached, the final draft will be sent back to the IMF. A Letter of Intent will then be issued and signed by the finance minister and the governor of the State Bank of Pakistan, assuring that the agreed reforms will be implemented.
The draft sets new performance targets for several institutions, including the ministries of finance, energy and petroleum, as well as the Federal Board of Revenue and other regulatory bodies. The framework also includes reforms related to agricultural income tax.
An IMF technical mission is expected to visit Pakistan by the end of April to begin discussions on the next federal budget for the 2026–27 fiscal year. The delegation is likely to stay through May to assist in preparing the budget in line with IMF projections.
Meanwhile, talks are still ongoing over the government’s plan to tackle circular debt in the gas sector. The proposal, which includes a possible increase of Rs3 to Rs5 in the Petroleum Development Levy on fuel, has not yet been included in the draft agreement due to pending consensus.
Pakistan’s gas sector circular debt has reached around Rs3,180 billion. The government plans to clear nearly Rs1,700 billion of this amount over the next six years, partly by using dividends from gas companies. Although the proposal has been approved by the Prime Minister’s Office and the Ministry of Finance, further discussions with the IMF are continuing to finalize the plan.
