Pakistan has achieved most targets under the second review of its debt programme.

According to details, the International Monetary Fund (IMF) has released a report on the government’s performance. Taxation on agricultural income and budgetary reforms were successfully implemented. According to the IMF report, Pakistan met most targets under the second review of the debt programme.

Governance and corruption reports were published with delay, while the FBR’s net tax target remained unmet. Out of 13 structural reforms, eight were completed. Taxation on agricultural income and budget reforms were successfully applied. Amendments were made to the law requiring officials to declare assets, and the electricity sector met its payment targets.

The plan to end special economic zones was completed later. Amendments to laws of certain state institutions were made belatedly. One condition related to the exemption on sugar imports was not met. Excise duty targets on fertilisers and pesticides were not achieved, while six other key targets were completed. A BISP target was missed by a small margin, although greater funds were spent on its core programmes. Targets for State Bank reserves and tax returns were achieved.

The State Bank of Pakistan’s (SBP) domestic assets target was also met. Government’s primary deficit remained within the set limit, and guarantees stayed within the IMF ceiling. The government sought waivers for remaining unmet targets. Targets for health and education spending were not reached.

Under the IMF programme, Pakistan’s economic performance improved. Despite difficult circumstances and floods, the economy remained resilient. Fiscal performance was strong, with a primary surplus of 1.3 per cent, meeting the IMF target.

Following the floods, food prices rose. According to the IMF, inflationary pressure is temporary. Foreign exchange reserves reached $14.5 billion, rising from $9.4 billion in one year. Reserves are expected to increase further in the coming years.

Pakistan recorded its first current account surplus in 14 years. Strong policies helped the country recover from recent shocks. Economic growth exceeded expectations in the current year, although recent floods slightly slowed the pace of growth for the next year. Foreign exchange reserves continue to improve steadily. Despite the floods, inflation remained under control. The EFF programme remains on track, as does the RSF programme. Targets of the first review were achieved.

Pakistan received a $1.2 billion tranche under both programmes. Post-flood, the importance of reforms and policy continuity has grown. The primary surplus target for the fiscal year 2025–26 is considered achievable. Revenue-enhancing and debt-reduction reforms continue. The IMF emphasised maintaining strict monetary policy to control inflation. Flexibility in the exchange rate is deemed necessary to absorb shocks.

Progress has been made in the power sector through tariff adjustments. Further reforms are needed to strengthen the sector. Improving governance and investment climate in public institutions is considered important. Commercial and investment reforms are necessary for production-led growth. RSF reforms are expected to improve flood risk management and water management.