Spokesman credits SEF reforms with stabilizing inflation ahead of crucial review
IMF Communications Director Julie Kozack at a press conference on Thursday. PHOTO: SCREEN CAPTURE
ISLAMABAD:
The International Monetary Fund (IMF) has acknowledged a marked improvement in Pakistan’s economic prospects, saying policy efforts under its Extended Fund Facility (EFS) have helped stabilize the economy, contain inflation and rebuild confidence, as the country prepares for a new round of review talks later this month.
At a press conference in Washington, IMF Communications Director Julie Kozack said that a team of IMF staff will visit Pakistan starting February 25 to conduct discussions on the third review under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Fund (RSF).
Kozack described Pakistan’s fiscal performance in fiscal year 2025 as “solid”, noting that the country has achieved a primary fiscal surplus of 1.3% of gross domestic product (GDP), a figure that aligns with agreed program targets.
He added that general inflation has remained relatively contained. In a significant development, he added, Pakistan recorded its first current account surplus in 14 years during the financial year 2025, indicating improvement in the stability of the external sector.
The IMF said these results reflect the impact of the reforms undertaken under the EFF program. Upcoming review discussions will assess Pakistan’s progress on reform benchmarks and determine next steps regarding disbursements, the spokesperson said.
An IMF mission led by mission chief Iva Petrova is expected to arrive in Karachi on February 25 for talks with the State Bank of Pakistan (SBP) before heading to Islamabad. Formal talks with federal and provincial authorities are scheduled to begin on March 2 and conclude around March 11.
Upon successful completion of the review, Pakistan would be eligible for the release of around $1 billion under the SAF and another $200 million under the RSF by the end of April.
Kozack also referred to Pakistan’s recently released Governance and Corruption Diagnostic Report, which outlines proposals for structural reforms. These include simplifying the design of tax policy, improving the transparency of asset declarations and leveling the playing field in public procurement.
The IMF has placed special emphasis on increasing the simplicity and transparency of the tax system and strengthening oversight of public procurement processes. Simplifying fiscal policy has been identified as one of the program’s most important reform priorities.
The review will also examine the implementation of the recommendations of the Governance and Corruption Diagnostic and the National Fiscal Pact. Performance through the end of December 2025 remained largely on track, although revenue shortfalls were noted, and authorities indicated these could be reduced following a recent tax ruling by the Federal Constitutional Court in favor of the government.
The Extended Fund Facility is a longer-term lending arrangement from the IMF aimed at helping countries address deep-rooted economic weaknesses and medium-term balance of payments challenges. According to the Fund, Pakistan’s policy measures under the program have contributed to stabilization and renewed confidence among international financial institutions.
