Pakistan and the IMF are expected to finalise a crucial agreement in the coming weeks, which could pave the way for more financial support for the country.
According to Topline Securities, a brokerage house, the signing of a Staff Level Agreement (SLA) between Pakistan and the International Monetary Fund (IMF) might take some time.
This is because the Pakistani government might share its financial plans for the upcoming fiscal year (FY26) with the global lender or even present the budget earlier than usual. The goal would be to secure the IMF board’s approval before the end of June.
Topline Securities also suggested that even if an initial agreement is reached soon, the IMF board might set certain conditions for final approval. These conditions could include the successful passage of the FY26 budget in line with the IMF’s recommendations.
Recently, an IMF team, led by Nathan Porter, visited Pakistan from February 24 to March 14, 2025. During their stay in Islamabad and Karachi, they discussed the initial review of Pakistan’s current economic program, which is supported by the IMF’s Extended Fund Facility (EFF). They also explored the possibility of a new arrangement under the IMF’s Resilience and Sustainability Facility (RSF).
Following the visit, Mr Porter stated that the IMF and Pakistan had made “significant progress” towards reaching an SLA.
He highlighted that Pakistan’s implementation of the current program has been strong. Discussions covered important areas such as plans to reduce public debt, maintaining a tight monetary policy to control inflation, speeding up reforms to make the energy sector more efficient, and implementing structural reforms to boost economic growth while strengthening social safety nets and improving spending on health and education.
The IMF also mentioned that discussions would continue remotely to finalise the details in the coming days.
Topline Securities believes these ongoing virtual discussions will focus on potential new tax measures in the FY26 budget, reforms in the energy sector, and progress on the privatisation plan.
The brokerage firm also noted that any delay in the IMF review could impact Pakistan’s external financial situation. In such a scenario, the government might need to rely on more expensive commercial loans to meet its reserve targets.
Once the current discussions are complete, the IMF staff will finalize their recommendations for the Executive Board’s review. This review is necessary for the board to approve the release of a $1 billion installment of funds for Pakistan.
