IMF confirms Pakistan’s economic progress

WEB PAGE: The International Monetary Fund (IMF) has acknowledged what it describes as a notable improvement in Pakistan’s economic trajectory, attributing the progress to sustained policy reforms undertaken under the Extended Fund Facility (EFF). According to the Fund, disciplined implementation has helped stabilise macroeconomic conditions, ease inflationary pressures and restore investor confidence.

According to Express Tribune, IMF Communications Director Julie Kozack pointed to Pakistan’s performance in the 2025 financial year as evidence of the programme’s impact. She noted that the country posted a primary fiscal surplus of 1.3 per cent of GDP, in line with agreed targets.

“Headline inflation has remained relatively contained,” Kozack said, adding that Pakistan recorded its first current account surplus in 14 years during FY2025 a development widely viewed as a significant strengthening of the external position after prolonged balance-of-payments strain.

The Fund maintained that these improvements stem from structural adjustments and fiscal discipline embedded within the EFF framework, measures it says have helped mitigate vulnerabilities and rebuild credibility with international markets.

Next programme review could release $1.2bn in fresh support

An IMF staff mission, led by Mission Chief Iva Petrova, is due to arrive in Karachi on 25 February 2026 to begin discussions on the third review under the EFF and the second review of the Resilience and Sustainability Facility (RSF). The delegation will initially engage with the State Bank of Pakistan before proceeding to Islamabad for consultations with federal and provincial authorities from 2 March until around 11 March.

Completion of the reviews would release approximately $1 billion under the EFF and a further $200 million through the RSF by the end of April 2026.

Kozack also referred to the Fund’s recently published Governance and Corruption Diagnostic Report on Pakistan, which outlines priority reforms including the simplification of tax policy, enhanced transparency in asset declarations and ensuring competitive neutrality in public procurement. The IMF underscored that reform of the tax system and stronger oversight mechanisms remain central to the programme’s objectives.

While programme performance through end-December 2025 has broadly remained on track, some revenue shortfalls were recorded. Pakistani authorities have indicated that these may be offset following a favourable ruling by the Federal Constitutional Court on the super tax matter.

The EFF, a medium-term lending instrument, is designed to assist countries confronting structural economic challenges and persistent balance-of-payments pressures. The Fund reiterated that Pakistan’s continued adherence to reform commitments has been instrumental in restoring stability and strengthening confidence among global lenders.

As the next review approaches, the outlook appears cautiously optimistic, signalling a gradual but tangible shift towards sustained economic recovery.