KEY POINTS
- Third review under the Extended Fund Facility (EFF) and second of the Resilience and Sustainability (RSF) formally launched
- Virtual technical talks focus on tax shortfall and external financing
- IMF questions the credibility of revised targets for the Federal Board of Revenue
ISLAMABAD: Pakistan and the International Monetary Fund continued on Wednesday the reviews under separate loan programmes, as technical officials joined virtually from Washington and sought progress on the revenue collection.
Ongoing is the third review of the Extended Fund Facility and the second of the Resilience and Sustainability Facility of the IMF.
The successful reviews would unlock nearly a billion dollars under the EFF and $200 million under the SRF.
A staff-level agreement with the review mission and approval of the IMF board would enable the release of an aggregate foreign exchange financing of $1.2 billion for Pakistan.
Tuesday and Wednesday’s discussions focused on a widening tax shortfall and external financing gaps, even as Islamabad reiterated its commitment to fiscal discipline and structural reforms, officials privy to the discussions told WE News.
Earlier, on Monday, Finance Minister Muhammad Aurangzeb met the visiting IMF mission led by Iva Petrova to kick off the third review of the Extended Fund Facility and the second review of the Resilience and Sustainability Facility.
While the inaugural policy-level engagement took place in Islamabad, officials confirmed that detailed technical discussions with the Washington-based lender began virtually on Tuesday and Wednesday and will continue in the coming days.
At the centre of the discussions is the performance of the Federal Board of Revenue and the credibility of its revised tax collection targets for the current fiscal year ending June 30, 2026.
According to officials familiar with the talks, the FBR has projected it can collect close to Rs 13,500 billion this fiscal year, against a revised target of Rs 13,979 billion after the IMF earlier agreed on the lowering of the original parliamentary target of Rs 14,130 billion.
However, the IMF is understood to have questioned how the FBR would bridge the gap beyond Rs 13,000 to Rs 13,200 billion, a range the Fund considers more realistic given current trends.
Tax authorities reported a shortfall of Rs 428 billion in the first eight months of the fiscal year and face a March target of Rs 1,366 billion, with officials acknowledging that crossing Rs 1,300 billion will require significant effort amid sluggish economic activity.
Finance ministry officials indicated that if revenue collection falls materially short, expenditure rationalisation may be required to maintain the fiscal deficit path, including the targeted primary surplus of 2.4 per cent of GDP by end-June.
In his opening remarks, Aurangzeb underscored that Pakistan has continued to consolidate macroeconomic stability achieved under the programme, highlighting reforms in taxation, the energy sector and state-owned enterprises.
He reiterated the government’s commitment to fiscal discipline, export-led growth and social protection for vulnerable segments.
Petrova thanked the minister for the comprehensive briefing and shared feedback from earlier discussions held in Karachi. Both sides agreed to continue engagements virtually as the review process advances.
The outcome of the review is critical for unlocking the next tranche under the IMF programme and reinforcing investor confidence, at a time when Pakistan faces global energy volatility and tightening external financing conditions.
