Pakistan and the International Monetary Fund (IMF) will begin policy-level negotiations today (Wednesday) as part of the third review of the $7 billion loan programme, paving the way for the release of the fourth tranche.

An IMF review mission has arrived in Pakistan for a 15-day visit and will stay until March 11.

The talks will begin in Karachi with technical-level discussions at the State Bank of Pakistan, followed by policy-level negotiations with officials from the Ministry of Finance in Islamabad.

According to finance ministry sources, the mission will review Pakistan’s economic performance during the first half of the current fiscal year (July-December) and assess progress on agreed targets.

The upcoming federal budget framework for the next fiscal year will also come under discussion.

Officials will brief the IMF team on tax reforms, developments in the energy sector, monetary policy, foreign exchange reserves and the overall fiscal framework.

The discussions will also cover governance, anti-corruption measures, appointments in key institutions and steps to strengthen the Federal Board of Revenue (FBR).

The government is expected to share an action plan on reforms, including measures related to asset declarations of public officials.

Sources said that while most programme targets have been met, Pakistan has faced a significant shortfall in tax collection.

The FBR recorded a tax shortfall of Rs329 billion in the first six months of the fiscal year, which widened to Rs372 billion.

Islamabad is expected to request a downward revision of the annual tax target.

Despite revenue challenges, officials maintain that the programme remains on track.

A primary fiscal surplus of approximately 1.3% of GDP has been achieved, while provinces collectively posted a cash surplus of Rs1,180 billion.

Foreign exchange reserves are reported to be above programme targets, and large-scale manufacturing recorded growth of around 6% between July and November.

The ongoing review is part of the IMF’s Extended Fund Facility (EFF) programme worth $7 billion, as well as a $1.4 billion Resilience and Sustainability Facility (RSF).

Pakistan has so far received $3.3 billion under the combined programmes.
Successful completion of the review would unlock the next tranche, providing further support to Pakistan’s economic stabilisation efforts amid ongoing fiscal and structural reforms.