The International Monetary Fund (IMF) has confirmed that Pakistan has successfully met all of its targets under the Extended Fund Facility (EFF) program and its loan program is on track.

Meanwhile, negotiations between Pakistan and the IMF on the preparation of the federal budget for the fiscal year 2025-26 are likely to conclude today, with the final consultation session scheduled for this evening.

In a press briefing held in Washington, IMF Director of Communications Julie Kozack announced that the IMF Executive Board completed its scheduled review of Pakistan's economic performance on May 9, following a staff-level agreement reached on March 25. The board had originally approved Pakistan’s EFF program in September 2024, with the first review set for early 2025.

“Pakistan has made positive progress in several reforms and has achieved all its goals under the program,” said Kozack. “As a result, the Executive Board unanimously approved the review and the corresponding tranche was released.”

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The disbursed funds, Kozack clarified, have been transferred to the State Bank of Pakistan to strengthen foreign exchange reserves. “These funds are not for budget support,” she emphasised, reinforcing the IMF's conditionality on the use of its assistance.

IMF rebuffs Indian criticism

The press conference also took an unexpected diplomatic turn when an Indian journalist questioned the IMF's decision. Kozack firmly responded, stating that the board’s decision was based on Pakistan’s economic performance alone, and all decisions were made through consensus.

“Pakistan has met all the targets of the EFF program,” she reiterated.

Outlook and regional concerns

Kozack expressed hope for peace in the South Asian region, particularly amid rising tensions between Pakistan and India. She offered condolences over recent human casualties in cross-border incidents and urged both nations to seek peaceful solutions to their disputes.

“We, along with the global community, remain hopeful for a peaceful resolution,” she said.

Also Read: Govt postpones federal budget 2025-26

On the other hand, during the ongoing discussions between Pakistan and the IMF in Islamabad, according to sources within the Finance Ministry, Pakistani authorities have tabled several proposals aimed at providing relief to the salaried class and promoting industrial growth. According to sources, the government has suggested:

Reducing income tax rates for salaried individuals.
Lowering tax rates on the industrial sector to reduce the cost of doing business and stimulate economic activity.
Minimizing development and non-development expenditures.

The proposals also include a potential increase in the defense budget for the upcoming fiscal year, a move being closely scrutinized in the context of broader budgetary constraints.

Sources reveal that Pakistan presented the IMF with plans to enhance both tax and non-tax revenue collections. This includes a framework under consideration for agricultural income tax.