IMF Confirms Pakistan Meets All EFF Targets; Budget Talks Near Conclusion
The International Monetary Fund (IMF) has officially confirmed that Pakistan has successfully met all targets under the Extended Fund Facility (EFF) program, putting its loan arrangement firmly on track.
Review Completion and Fund Disbursement
At a press briefing in Washington, IMF Communications Director Julie Kozack announced that the IMF Executive Board completed its review of Pakistan’s economic progress on May 9, following a staff-level agreement in March. With all performance criteria met, the board unanimously approved the disbursement of the next tranche, which has now been transferred to the State Bank of Pakistan to bolster foreign exchange reserves. Kozack clarified that these funds are strictly for reserve support, not for budget financing.
Budget Negotiations to Conclude Today
Concurrently, negotiations between Pakistan and the IMF over the federal budget for FY 2025-26 are expected to conclude today. The final consultation session is scheduled for this evening in Islamabad. Sources within the Finance Ministry indicated that Pakistan has proposed several budgetary measures, including:
- Reduced income tax for salaried individuals
- Lower taxes for the industrial sector to boost growth
- Minimized development and non-development spending
- A potential increase in the defense budget, despite fiscal pressures
Revenue Measures and Reforms
Pakistan has also presented a plan to increase tax and non-tax revenues, including a framework to consider taxing agricultural income, a traditionally untapped source.
IMF Rejects Indian Criticism
When challenged by an Indian journalist about the IMF’s support to Pakistan, Kozack firmly responded that the decision was purely based on Pakistan’s economic performance, and was unanimously approved by the board.
Regional Peace and Outlook
Addressing recent regional tensions, Kozack extended condolences over cross-border casualties and emphasized the IMF’s hope for peaceful resolution between Pakistan and India.
