Islamabad (TDI): Pakistan is poised to receive over $1 billion under the third tranche of the IMF’s Extended Fund Facility (EFF), despite several shortfalls, as authorities prepare to begin policy-level talks with the visiting IMF mission on Monday.
According to official sources, the technical phase of discussions has already concluded, Dawn reported on Saturday. The policy-level negotiations are expected to involve requests for a couple of waivers, with the review likely to be finalized in meetings with Finance Minister Muhammad Aurangzeb by October 9–10.
While the power sector has shown improvement in recoveries and circular debt reduction, partly through subsidy reallocations and fresh loans, federal revenues and provincial fiscal performance have fallen short. Budget surpluses and agricultural tax collections remain weak points, the paper said citing sources.
Additional measures are being crafted over the coming days, alongside allowances for flood-related spending, to help close the second review. This would unlock the next disbursement of more than $1bn by early next month, pending IMF board approval. Major IMF shareholders remain supportive of Pakistan, creating a favourable backdrop for the talks.
Read More: IMF Concerned Over Flood Losses, May Give Relief: Food Minister
The Federal Board of Revenue (FBR), under close IMF scrutiny, has missed multiple targets. It fell short of the end-June 2025 revenue goal and registered a Rs200bn shortfall in the first quarter of the current fiscal year, averaging more than Rs65bn per month. The FBR had recently launched a sweeping reform program, including new fleets of vehicles, but collections have not kept pace.
Authorities are banking on recoveries from pending court cases to bridge the gap, though further measures may be needed by November if these funds fail to materialize.
The IMF has also flagged the inability of Punjab and Sindh to meet their surplus commitments. Punjab was supposed to provide a Rs740bn surplus to the Centre, Sindh Rs370bn, KP Rs220bn, and Balochistan Rs155bn. However, Sindh presented a deficit budget for FY26, while Punjab’s chief minister publicly criticized the IMF for holding provinces accountable on fiscal matters.
Read More: Pakistan Informs IMF of Rs371bn Flood Losses, Cuts Growth Target to 3.9%
Flood-related demands are expected to worsen provincial performance this year. Despite all provinces passing agricultural income tax laws, actual implementation, due to begin in September-October, is uncertain, especially in Punjab and Sindh where floods have disrupted revenue mobilization.
Talks have also covered the growing circular debt in the gas sector, with discussions on future benchmarking and reporting. Compliance with state-owned enterprise reforms remains unresolved, including issues around the Pakistan Wealth Fund and mandatory public disclosures of assets by officials, the report added.
