The International Monetary Fund (IMF) Executive Board is set to meet in December to consider the approval of a $1.2 billion tranche for Pakistan under the Extended Fund Facility (EFF).

According to official sources, the tranche also incorporates $200 million under the Climate Resilience Financing initiative.

The staff-level agreement between Pakistan and the IMF was signed on October 15, and officials at the Ministry of Finance remain optimistic that the next tranche will be cleared smoothly under the ongoing program.

IMF seeks updated economic data

Sources revealed that the IMF has requested revised economic data from Pakistan to account for the recent floods. The disaster has reportedly impacted key sectors, with the Fund estimating that Pakistan’s GDP growth may decline by 0.25 to 0.5 percent.

The IMF now projects Pakistan’s GDP growth between 3.25 and 3.5 percent for the ongoing fiscal year. The agricultural sector, in particular, is expected to witness reduced productivity due to flood-related damages.

Possible review of tax and fiscal targets

The IMF may also revisit the Federal Board of Revenue’s (FBR) tax collection targets amid concerns about economic slowdown. Sources indicate that Pakistan has assured the Fund it will take necessary measures if the tax targets are missed.

A revised tax plan is likely to be presented to the IMF soon. Meanwhile, the country’s current account deficit is projected to widen this fiscal year and could reach one percent of GDP within the next five years.