Islamabad – Talks between Pakistan and an International Monetary Fund (IMF) staff mission shifted to a virtual format on Monday following regional instability stemming from the attack on Iran by the United States and Israel. The IMF mission, led by Iva Petrova, relocated to Istanbul following guidance from the agency’s headquarters, causing disruption to planned meetings.
IMF Discussions Continue Virtually
Despite the relocation, the IMF confirmed that discussions regarding the third review of Pakistan’s Extended Fund Facility (EFF) and the second review of the Resilience and Sustainability Facility (RSF) will continue virtually. The mission began discussions with authorities in Karachi and Islamabad on February 25, initially including meetings with the State Bank of Pakistan and the business community.
Finance Minister Muhammad Aurangzeb presided over the initial meeting, where both sides acknowledged uncertainty surrounding the duration and impact of the evolving regional security situation. Both parties committed to closely monitoring the situation and discussing potential contingency measures.
Aurangzeb emphasized Pakistan’s progress in “consolidating the hard-earned gains in macroeconomic stability” achieved under the EFF and RSF programs. He highlighted the government’s commitment to fiscal discipline, structural reforms in taxation and the energy sector, and advancements in tax administration.
The finance minister also reaffirmed the government’s commitment to privatization and state-owned enterprise reform, citing growing investor confidence. He noted progress in rightsizing the federal government and pursuing an export-led growth strategy.
Aurangzeb informed the IMF mission of the government’s response to recent flood challenges and highlighted the importance of macroeconomic stability in building resilience to external shocks. He acknowledged emerging global headwinds but assured the IMF of a coordinated policy response.
Significance of the Reviews
The current review talks, scheduled to conclude on March 11, are particularly significant as they involve assessing performance for the half-year ending December 31, 2025, and preparing budget proposals. Successful completion of the review could unlock approximately $1 billion under the EFF and $200 million under the RSF by the end of April.
Frequently Asked Questions
What is the purpose of the IMF mission’s visit?
The IMF mission, led by Iva Petrova, is in Pakistan to conduct the third review of the Extended Fund Facility (EFF) and the second review of the Resilience and Sustainability Facility (RSF).
Why were the meetings moved to a virtual format?
The meetings were moved to a virtual format due to the regional situation following the attack on Iran by the United States and Israel, following an advisory issued by the IMF headquarters.
What is the expected timeline for the completion of the review?
The review talks are scheduled to conclude on March 11, with a final wrap-up meeting planned with the finance minister.
Given the complexities of the global economic landscape, will Pakistan be able to maintain its current economic trajectory?
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