Pakistan Set to Get Over $2 Billion from IMF After Staff-Level Agreement Next Month

A staff-level agreement with the International Monetary Fund (IMF) will likely be reached by the end of April as the lender has seen strong program implementation across several critical agendas, Finance Division sources informed ProPakistani. However, it is expected that the lender will approve $1.2 billion in climate financing by the end of this month for cumulative release through the Executive Board together with the next tranche next month. Sources informed ProPakistani that the current economic situation is in accordance with the lender’s wishes and all indicators are trending positively, with significant improvements observed in February and March. The Pakistani Rupee is also expected to remain stable at 277-279 in the coming days. The upcoming federal budget taxes won’t see many changes as current budget taxes have so far been on track despite resistance from various sectors, particularly real estate, development, and retail. Also, taxation on sub-sectors will be solved at the provincial level, sources added. However, the lender has revised the FBR’s annual tax collection target from Rs. 12.97 trillion to Rs. 12.33 trillion for the current fiscal year. The Fund has raised questions about the enforcement of certain tax measures and doesn’t feel there’s a need to overachieve with several agendas on track, sources added. Also, there is still some level of uneasiness on the topic of non-filers. More legal action would be pursued against them the upcoming fiscal year. Despite these challenges, foreign investment is flowing into the stock market, and efforts are underway to reduce interest costs on loans, sources stated. Sources further stated that the Finance Division plans to increase the tax-to-GDP ratio to at least 15 percent with full efforts starting July 2025. On an unrelated matter, they said a new contributory pension system for the armed forces is also set to begin on July 1, 2025. The Finance Division has expressed optimism about the ongoing negotiations with IMF, predicting the finalization of a staff-level agreement by end-April.