Pakistan Hopes to Secure IMF Staff-Level Agreement in Upcoming U.S. Meetings

Pakistan is closing in on a staff-level agreement (SLA) with the International Monetary Fund, with officials optimistic that a deal could be finalized during Finance Minister Muhammad Aurangzeb’s upcoming visit to the United States. The agreement, which would unlock about $1.2 billion in funding, hinges on consensus over the country’s external account and the verification of flood-related losses and their fiscal impact. The IMF has already shared a draft Memorandum of Economic and Financial Policies (MEFP) with Pakistani authorities following two weeks of talks in Islamabad and Karachi. “We were at the cusp of finalising the SLA, but two crucial tables that form part of the MEFP required further adjustments,” reported Dawn, adding that recent data on foreign remittances has strengthened Pakistan’s position. The State Bank of Pakistan is expected to maintain a cautious monetary policy stance amid persistent inflation, while the final assessment of flood-related damages remains pending. The IMF mission reportedly praised the power division, led by Secretary Dr. Fakhre Alam Irfan, for exceeding performance targets, but warned that timely tariff adjustments and corrective measures are essential for sector sustainability. The government is under pressure to ensure prompt disbursement of committed subsidies, including payments for waived or relaxed consumer bills in flood-affected districts. Provincial governments must also meet cash surplus targets, with fiscal policy expected to remain tight and development spending in flood-hit areas on hold. The Federal Board of Revenue is preparing to revise its revenue collection target downward, with new measures set to be implemented by January 2026 to address any further shortfalls. These issues are expected to be resolved during the upcoming IMF-World Bank annual meetings, where Pakistan’s delegation, led by the finance minister, the central bank governor, and the FBR chairman, will seek to finalize the agreement. Officials say public debt metrics, including interest rates and maturities, remain within target.