ISLAMABAD (Mudassar Ali Rana) – A significant progress has been made toward a staff level agreement between Pakistan and the International Monetary Fund (IMF) under the Extended Fund Facility and the Resilience and Sustainability Facility, sources said.
They said that the IMF has shared a draft of the Memorandum of Economic and Financial Policies with the government. The staff level agreement is expected once both sides reach consensus on the draft document. Ministry of Finance has circulated the MEFP draft among relevant ministries and divisions for review, and consultations are currently underway.
According to sources, once all stakeholders agreed on the contents of the MEFP, the finalized draft would be sent back to the IMF. This will be followed by the issuance of a Letter of Intent (LoI) to be signed by the finance minister and the governor of the State Bank of Pakistan, assuring implementation of agreed reforms.
The IMF has set new targets in the MEFP for key institutions, including the ministries of finance, energy, and petroleum as well as the Federal Board of Revenue, National Accountability Bureau, state-owned enterprises, Oil and Gas Regulatory Authority, National Electric Power Regulatory Authority, Securities and Exchange Commission of Pakistan, State Bank of Pakistan, Auditor General of Pakistan, and provincial governments. The framework also covers taxation of agricultural income.
The sources revealed that the IMF technical mission is expected to visit Pakistan by the end of April to hold talks on next budget. It would assist in preparing the federal budget for fiscal year 2026–27 in line with its projections and assessments. The visiting delegation is likely to stay in Pakistan through May.
The sources said that the government’s plan to address the circular debt in the gas sector has not yet been incorporated into the MEFP as consensus with the IMF has not been reached. The government has proposed increasing the Petroleum Development Levy on petroleum products by Rs3 to Rs5 to help manage the issue.
They said Pakistan’s gas sector circular debt currently stands at approximately Rs3,180 billion. The government has prepared a plan to settle around Rs1,700 billion of this amount, which was discussed with the IMF during the recent economic review talks. The plan envisages eliminating the circular debt over the next six years partly through the utilization of dividends from gas companies. The proposal has received approval from the Prime Minister’s Office and the Ministry of Finance but further negotiations with the IMF are ongoing to finalize the mechanism.