IMF-Pakistan Talks Enter Final Phase, $1.2B Tranche in Sight

Key takeaways

Pakistan’s policy-level talks with the IMF are expected to wrap up by October 7. A successful fifth review would unlock about $1.2 billion — $1 billion under the Extended Fund Facility and $200 million under the climate resilience facility.

Flat vector illustration of an open green ledger with a rising gold bar chart, coins and a calculator, symbolizing Pakistan's IMF loan negotiations — Illustration: WHAT TODAY?

Pakistan’s negotiations with the International Monetary Fund are in their final stretch, with policy-level talks for the fifth review of the loan programme expected to conclude by October 7, according to reports from Islamabad.

The IMF mission and Pakistani officials are now finalizing the remaining targets, with Prime Minister Shehbaz Sharif expected to receive a briefing on the latest state of negotiations, after which a meeting between the Fund’s delegation and the prime minister is likely.

What’s on the table

The two sides are working through the IMF’s nine review tables — the final set of fiscal and reform benchmarks. According to sources cited in Pakistani media, Islamabad has met most of its economic targets under the programme.

Officials have briefed the mission on the Securities and Exchange Commission of Pakistan’s performance and progress on privatization, including the process of seeking expressions of interest for three electricity distribution companies. Talks on a new auto policy are also still in progress, with a proposal to raise the concessional sales tax on electric vehicles under discussion — though sources say no complete agreement has been reached on that front yet.

Earlier in the review, Finance Minister Muhammad Aurangzeb met the IMF staff mission led by Iva Petrova for the customary kick-off, briefing them on macroeconomic indicators, credit rating improvements and the investment climate.

Energy reforms remain the pressure point

The energy sector has been a central theme. The IMF has pressed Pakistan to accelerate power-sector reforms and meet its circular debt targets. Officials told the mission that under the zero-inflow plan, the aim is to keep energy circular debt around Rs1.6 trillion, while noting the sector had been affected by regional conditions.

On the external front, Pakistani negotiators told the Fund they expect to secure around $15 billion in foreign financing during the current fiscal year. Officials said the country paid $2.2 billion in external debt in July alone — including $1.4 billion in Chinese commercial loans — and expects total external payments of roughly $21.5 billion this fiscal year, around $5 billion less than last year. They also noted the State Bank of Pakistan had purchased $28 billion from the market over the past three years.

There was also relief on the domestic front: sources cited by ARY News said the IMF is satisfied with the Federal Board of Revenue’s July-September tax collection, easing fears of a mini-budget or additional taxes during the current fiscal year.

Why it matters

For ordinary Pakistanis, the review’s outcome shapes everything from fuel and power prices to the rupee’s stability. A successful review keeps the Fund’s programme on track and unlocks financing that anchors Pakistan’s foreign exchange reserves. A derailment, by contrast, would rattle markets and revive speculation about emergency tax measures.

What’s next

If the talks conclude successfully, the IMF mission will recommend disbursement of about $1.2 billion — roughly $1 billion under the Extended Fund Facility and $200 million under the Resilience and Sustainability Facility — with the funds expected to arrive by the end of October or early November. Dawn reported that Pakistan may still need waivers from the IMF’s executive board for slippages on some structural benchmarks before the money is released.

The meeting between the IMF delegation and the prime minister, expected soon after his briefing, will be the clearest signal yet of whether the fifth review will close on schedule.