Tag: IMF

Finance Minister Muhammad Aurangzeb is set to participate in the 2025 Spring Meetings of the World Bank (WB) and the International Monetary Fund (IMF). The high-profile meetings will feature a number of high-ranking state officials and are scheduled to take place in Washington, United States.

According to credible reports, the meetings will last six days (April 21-26) and Muhammad Aurangzeb will meet with international creditors and foreign dignitaries. Aside from officials from the IMF and the World Bank, notable attendees will include central bankers and finance ministers from most countries.

Muhammad Aurangzeb has meetings scheduled with the World Bank, the IMF, several international credit rating agencies, and even investment and commercial banks. Recently, Pakistan’s credit rating has improved on the global scale, as both Fitch and Moody’s upgraded Pakistan’s rating.

If Muhammad Aurangzeb can give rating agencies a positive outlook, it could help Pakistan unlock a plethora of economic benefits. Generally, a higher rating translates into lower borrowing costs, greater foreign direct investment inflows and improved access to international capital markets.

With Pakistan being deemed as creditworthy by credit agencies, investors are more likely to park their funds in the domestic economy. More importantly, it could make it easier for Pakistan to issue bonds in international markets if other credit rating agencies follow suit after meeting with Muhammad Aurangzeb. 

Aside from meetings with institutions, reports indicate that he is expected to meet with key officials from the US State and Treasury Departments, as well as China, Saudi Arabia, and the United Kingdom. According to reports, Muhammad Aurangzeb will also participate in the 13th Ministerial Meeting of the Coalition of Finance Ministers for Climate Action.

Analysts believe that he will likely attempt to negotiate a better commercial arrangement with the Trump administration. While temporarily suspended, Pakistan faces a 29 percent tariff from the US, which could detrimentally affect the domestic economy. 

A recent report by the Pakistan Institute of Development Economics (PIDE) revealed that US tariffs could result in a reduction of approximately $1.4 billion in Pakistan’s foreign exchange inflow.  Moreover, a spike in the domestic unemployment rate is possible as PIDE projects that half a million workers could be fired.

Many believe that if Muhammad Aurangzeb or subsequent delegations from Pakistan are unable to secure better terms for Pakistan, the macroeconomic losses may prove to be devastating. Reports suggest that a team from Pakistan might depart for the US in the coming weeks to meet with state officials to discuss trade agreements and outstanding tariffs.

The International Monetary Fund (IMF) has initiated proceedings to conduct its second ‘Corruption and Diagnostic Mission’ in the country.

According to reports, the international lender intends to address issues that have plagued the country since its inception, over which, an IMF delegation will remain in discussions with domestic authorities till April 14.

These meetings will go over multiple state departments and entities, reportedly including the Supreme Court’s accountability and registrar court.

The IMF delegation is slated to engage with approximately 30 departments to improve governance, launch a crackdown against money laundering and to tackle Pakistan’s chronic corruption problem.

The fight against the aforementioned issues can be conducted by focusing on improving financial oversight, analysts say, outlining the IMF’s keen interest in Pakistan’s corruption and governance problems.

Reports reveal that the international lender is on a routine follow up visit to ensure that everything is running smoothly and in line with the objectives discussed in February as well.

The delegation aims to write a report along with policy recommendations that could allow for Pakistan to reshape its governance mechanisms. Given Pakistan’s longstanding issues with money laundering and rampant corruption, many believe that the IMF’s advice would be for the country to tackle these problems.

In 2024, Pakistan scored an abysmal 27 points on the corruption perceptions index. For reference, the index ranges from 0 to 100 with a score of 0 indicating rampant corruption and 100 reflecting the complete absence of corruption from institutions.

According to data, Pakistan ranks as the 135th most corrupt country in the world. This helps explain the IMF’s interest in reforming the country’s systems to pave way for a fairer and more transparent system. Earlier, the IMF also intended on exploring the possible economic effects of these vulnerabilities in their assessment, which could be included in the final report.

Moreover, the IMF’s persistent focus on money laundering is warranted as well. This is because as per the Basel Anti-Money Laundering Index (AML) index, that aims to assess the risk of money laundering and related financial crimes on a country-by-country basis, Pakistan has a fairly high risk score of 5.56 points.  

For reference, a score of 10 indicates extreme vulnerability to such practices. With Pakistan’s score being less than envious, the IMF intends to ensure that the incidence of such financial crimes is reduced.

The federal government has decided to partially alleviate financial strains on households that high power bills were causing. Despite initial hesitations to revise tariffs, the IMF allowed lawmakers to cut tariffs by 1 rupee per kilowatt-hour (kwh) for consumers. Reports claim that the slash in tariffs will be sustained by diverting revenues generated from levies on captive power plants.

The international lender’s greenlight to pass relief to the general public could allow for households to collectively witness savings of PKR100 billion. While the government collects sizable revenue inflows from taxes on CPPs, authorities still intend to find other avenues to boost both fiscal budget and household savings.

As per credible reports, Islamabad has recently renegotiated the terms of its agreements with several Independent Power Producers (IPPs) allowing for a great deal of savings.

The federal government was able to secure better deals with IPPs largely because of the change in global oil prices. Islamabad managed to reach agreements with seven IPPs earlier this week and attained a tariff reduction of 0.5 rupees per unit.

While the tariff cut seems measly at first glance, key officials from the power division have estimated that the tariff revisions could result in 920 billion rupees in savings over the life of the IPP agreements. Details from reports suggest that the savings are linked to capacity payments that have to be made to the IPPs.

Moreover, reports have revealed that a PM Office announcement earlier this month declared that petroleum prices would remain unchanged despite the existence of an opportunity to slash prices of the commodity by 13 rupees per liter.

Previously, the IMF had instructed the government to not pass on power relief to the general public and instead, was tasked with collecting this amount to consolidate Pakistan’s fiscal position. Moreover, after reaching a staff-level agreement with the international lender, Islamabad had decided to effectively disregard the IMF’s cautionary advice and slashed tariffs.

However, the IMF has approved revisions to the tariff and the government can enact the cut without backlash from the international lender.

While the magnitude of the tariff cut remains unknown, initial estimates quoted in reports suggest that the general public could soon receive good news. This is because the tariff cut that has been approved by the cabinet is expected to be substantial and will be announced by Prime Minister Shehbaz Sharif in the coming days.

Reports claim that Shehbaz Sharif deliberately delayed the announcement of tariff cuts to not get in hot water with the visiting IMF delegation. This is because if the international creditor believed that Pakistani authorities were not committed to following austerity measures, an agreement may not have been reached during Islamabad-IMF discussions.

Initially, Shehbaz Sharif was supposed to announce the reduction in tariffs in a speech on March 23 but, he was unable to do so given the ongoing negotiations with the IMF.

Many believe that the tariff cuts will free up purchasing power of households which they can allocate towards other expenditures. This could allow businesses to experience a surge in sales volume and boost profit margins.

The International Monetary Fund (IMF) has decided to reject the Federal Board of Revenue’s (FBR) proposal to slash a plethora of taxes. As per credible reports, authorities from Pakistan had requested for a reduction in taxes pertaining to the sale of tobacco and beverages.

Moreover, the Pakistani side had also asked the international lender for permission to cut property transaction taxes. However, the IMF has officially rejected this request, given the current state of the economy.

Previously, authorities had suggested that the international creditor would not oppose the suggested two percent reduction in withholding tax on property buyers. Had this been the case, the volume of property-related transactions could have increased sharply from April 1, 2025 – as formal approval would have been received by this date.

However, the IMF has ensured that no such approval will be extended to Pakistan. Mahir Binci, The IMF’s Resident Cheif (Pakistan), dispelled rumours surrounding reductions in taxes and assured that the tax collection target will not be subject to any downward revisions.

Some believe that cash-strapped Pakistan is losing the right to freely exercise its own fiscal policy. While analysts may assert this to be true, Pakistan’s suboptimal macroeconomic situation leaves little room for disagreement with the IMF.

According to reports, a Staff Level Agreement (SLA) may be reached soon at the conclusion of Pakistan-IMF negotiations. However, the federal government and local authorities will have to guarantee that the country follows the economic roadmap laid out by the IMF.

Of the aforementioned guarantees, the federal government will have to ensure that provincial governments cease their minimum support price (MSP) purchasing of wheat. Recent reports revealed the IMF’s distaste for such policies given their tendency to strain fiscal budgets – a phenomenon which a country following austerity measures cannot afford.

While the international lender is imposing stringent restrictions on Islamabad’s use of fiscal policy, reports indicate that the IMF wants to inject even more funds into the economy. The IMF wishes to expand the scope of the existing $7 billion Extended Fund Facility (EFF) program by signing Pakistan onto the Resilience and Sustainability Facility (RSF) program.

Reports indicate that the RSF program could unlock a whopping $1 billion for Pakistan. Islamabad can mobilise these funds in its fight against climate change by authorising and funding initiatives that boost the country’s resilience to disasters.

International Monetary Fund (IMF) calculations suggest that Islamabad might not be able to achieve its annual tax collection target, falling short by a staggering Rs490 billion.

As per the details, earlier this week, a delegation from the IMF began the first biannual review of the $7 billion Extended Fund Facility (EFF) programme. Pakistan believed that talks would remain successful and that the country was on track to receive the $1.1 billion tranche from the international creditor within weeks.

However, reports claim that the IMF’s assessment could strain Islamabad-IMF relations as the international creditor believes the government would fail to reach its tax target of Rs12.9 trillion. Moreover, analysts suggest that the IMF might lay out a slew of austerity measures in order for the economy to get back on the right track.

Lawmakers and authorities may enact significant cuts in the government’s expenditure while simultaneously attempting to boost the tax base. If successfully implemented, these fiscal policy measures could help appease the IMF.

According to reports, Islamabad’s discussions with the IMF could also result in lawmakers passing a mini-budget to correct the budget deficit. However, it will be up to the Ministry of Finance (MoF) to determine if tax hikes or budget cuts are to be used to balance the budget.

While the Federal Board of Revenue (FBR) struggles to generate enough revenue, a delegation of representatives from the tobacco industry have requested for the Federal Excise Duty (FED) to be reduced by 25 percent.

The representatives cited how the extortionate 254 percent hike in the FED was effectively wiping out the willingness of the tobacco industry to comply with domestic tax laws. Individuals involved in the manufacturing process of cigarettes have turned to supplying them illegally.

Reportedly, illicit cigarette manufacturing operations are causing the national exchequer to lose approximately Rs300 billion to Rs1 trillion. If the FBR can even only get the tobacco industry to comply, the projected gap in the fiscal budget will be plugged, potentially even leaving enough funds for the revenue watchdog to post a surplus.

However, key officials from the FBR have voiced their concerns regarding the request. This is because the FBR could lose out on a whopping Rs50 billion, exacerbating the budget deficit instead.

Islamabad may have to strictly follow a contractionary fiscal policy to appease the International Monetary Fund’s (IMF) delegation that is currently visiting Pakistan. As per reports, lawmakers and authorities alike are considering cutting back on government expenditures during the last quarter of fiscal year (FY) 2024-25 in an attempt to meet targets set by the international lender.

The stakes are high for cash-strapped Pakistan as the delegation will decide if Islamabad’s efforts warrant the disbursement of the next tranche of the Extended Fund Facility (EFF) program. If authorities can convince the IMF of its efforts, the international creditor may release a loan amount of $1.1 billion to Pakistan, which is vital for the recovery of the economy.

According to credible reports, Islamabad is planning to enact additional fiscal measures to boost revenue collection levels. These measures include a possible slashing of the Public Sector Development Program’s (PSDP) budget and boosting taxation revenues from real estate and retail sectors.

Reports claim that the federal government may also attempt to cover revenue shortfalls experienced in the first half of FY 2024-25 by enacting special emergency measures – which were agreed upon under the previous EFF program meeting.

Authorities have revealed the existence of a revenue gap which, in almost three-quarters of the current FY, has swelled to a staggering 600 billion rupees. While the government plans to plug this gap by boosting revenue, it may fall short as experts have already labelled the targets as ‘ambitious’ from their inception.

However, Islamabad needs to mobilize resources to plug the aforementioned gap, as reports claim that if left unattended, the shortfall may grow to a whopping one trillion rupees by the end of the fourth quarter of FY 2024-25.

As per reports, IMF officials expect Islamabad’s efforts to yield results at this stage of the loan program, which is realistically only possible by strictly following the road map the officials have laid out. However, many believe that revenue targets could be missed by even larger margins in the coming periods.

This is because the State Bank of Pakistan’s (SBP) exceptional profit levels augmented the country’s budget in the first half of FY 2024-25. The SBP has to dedicate a portion of its profits to the federal government. Moreover, petroleum levies have allowed the government to augment its income to meet targets.

While levies on petroleum are a stable source of income for the federal government, the same cannot be said for SBP profits – as interest rates have declined by 1000 basis points over the past seven months.

A delegation from the International Monetary Fund (IMF) has begun the first biannual review of the $7 billion Extended Fund Facility (EFF) program. According to reports, Islamabad believes that talks will remain successful and that Pakistan is on track to receive a whopping $1.1 billion from the international creditor within weeks.

The global lender’s mission is comprised of nine members and is headed by senior IMF economist Nathan Porter. As per credible reports, the IMF team will meet with Pakistani lawmakers and officials over the course of 10 days (March 3 to 14) to ascertain whether certain conditions have been met.

These conditions pertain to Pakistan’s compliance with quantitative targets, performance criteria and structural benchmarks set by the IMF as per the 37-month EFF program. Earlier, reports had revealed that there had been difficulties regarding the following of certain deadlines; however, Islamabad had successfully met these deadlines, albeit with some minor delays.

Reportedly, a high-ranking public official commented that the review was based on the first half of fiscal year (FY) 2024-25, which some believe could be a cause for concern. This is because some targets remained unmet at that point in time, and since the disbursement of the $1.1 billion tranche is subject to IMF’s review, the EFF program seemed to fall under threat.

However, the senior official was quick to outline that measures had been taken to ensure that targets were met, which may earn Pakistan IMF’s grace. According to reports, the greatest shortfall from the targeted amount was that of revenue, which highlights the failure of the Federal Board of Revenue (FBR).

At the end of the first half of FY 2024-25, the FBR reportedly missed its revenue target by a staggering 386 billion rupees. However, Islamabad has balanced this shortcoming by utilizing its above-par primary budget surplus and revenue-to-GDP ratios.

Islamabad achieved its budget surplus largely in part because of the State Bank of Pakistan’s (SBP) exceptional profit levels. The SBP has to dedicate a portion of its profits to the federal government. Moreover, petroleum levies have allowed the government to augment its income to meet targets.

Many worry about the sustainability of holding the aforementioned budget surplus. While levies on petroleum are a stable source of income for the federal government, the same cannot be said for SBP profits.

One of the major reasons why the SBP managed to generate abnormal profits was the hike in interest rates, which was witnessed in 2023-24. However, with interest rates normalising again, many expect SBP’s contributions to the budget to shrink.

Hence, while authorities have utilised SBP profits to meet targets, this may not be possible further down the line if targets remain unmet at the next biannual review.

The International Monetary Fund (IMF) has commented on Islamabad’s dedication to the Governance and Corruption Diagnostic Assessment (GCD), appreciating the federal government’s efforts and planning to continue the ongoing partnership with the cash-strapped nation.

According to reports, the IMF recently sent out a scoping mission to Islamabad to go over the foundations of the GCD at the behest of the federal government. The mission was led by Joel Turkewitz, senior counsel at the IMF’s legal department, who was in Islamabad from February 6 to 14.

The mission, IMF said, aimed to study corruption and governance weaknesses surrounding six core state functions. Reports revealed that these core state functions were anti-money laundering and countering the financing of terrorism (AML-CFT), central bank governance and operations, financial sector oversight, market regulation and rule of law.

IMF’s official statement said that its delegation collaborated with several officials and entities from Pakistan, including the auditor general, Securities and Exchange Commission of Pakistan (SECP), Finance Division, the Federal Board of Revenue (FBR), Supreme Court of Pakistan (SCP) and the Ministry of Law and Justice.

However, reports said, IMF’s interactions were not limited to state entities only as it also collaborated with business associations and global partners.

Despite the global lender’s appreciation, Pakistan is not yet in the clear as IMF’s team is set to once again visit Pakistan within the year to collect additional information regarding weaknesses negatively impacting the country’s governance and corruption metrics.

In 2024, Pakistan scored an abysmal 27 points on the corruption perceptions index. For reference, the index ranges from 0 to 100 with a score of 0 indicating rampant corruption and 100 reflecting the complete absence of corruption from institutions.

According to data, Pakistan’s ranks as the 135th most corrupt country in the world. This helps explain the IMF’s interest in reforming the country’s systems to pave the way for a fairer and more transparent system. The IMF also intends on exploring the possible economic effects of these vulnerabilities in their assessment.

Currently, two IMF “policy-level” delegations are set to visit Pakistan. The first of these will go over the climate resilience project that could unlock $1 billion in funding for the project. The other delegation will visit the cash-strapped country to review the $7 billion Extended Fund Facility Program that Pakistan is currently a part of.

The IMF is also supposed to review Islamabad’s proposal to slash the extortionately high power tariffs. However, a similar proposal was recently rejected by the IMF.

The International Monetary Fund (IMF) is conducting thorough checks on Pakistan’s judicial and regulatory systems under the current $7 billion Extended Fund Facility (EFF) program. As per reports, an IMF technical team recently began its seven-day assessment period of governance-related institutions to help Islamabad grapple with the longstanding issue of corruption.

In October 2024, Islamabad agreed with the IMF to strengthen its anti-corruption institutions and enhance growth inclusivity to foster a more equitable environment for businesses and investors.

Following this agreement, officials set July 2025 as the deadline to publish the Governance and Corruption Diagnostic Assessment (GCDA) report. As per the Ministry of Finance, officials are supposed to provide policy recommendations to tackle governance and corruption-related ‘vulnerabilities’.

According to reports, the IMF’s mission is to collaborate with senior judiciary personnel, financial regulatory bodies, taxation officials, and electoral officers.

The assessment will study lapses surrounding six fundamental state operations, namely fiscal administration, central bank operation, financial market oversight, market regulatory bodies, law enforcement, and anti-money laundering institutions.

The IMF intends to find vulnerabilities in the aforementioned state operations by analysing data from the State Bank of Pakistan, the Finance Division, the Federal Board of Revenue, the Auditor General’s Office, the Securities and Exchange Commission of Pakistan, the Election Commission, and the Ministry of Law and Justice.

According to reports, the GCDA report will offer recommendations to fight corruption, allowing lawmakers in Islamabad to boost the effectiveness of its institutions. If the IMF is able to assist Islamabad in this manner, the resulting governance system might help Pakistan enjoy sustainable economic growth – since a lack of corruption and transparency helps foster a business-friendly environment.

Historically, the global economic watchdog’s main focus has been fixing international macroeconomic issues. However, the IMF occasionally provides guidance to countries to promote public sector transparency as per the finance ministry.

According to the IMF’s guidelines, economic stability depends on following the law, improving the public sector, and combating corruption. The IMF initiated its governance policy in 1997 and strengthened it in 2018 by introducing a new member-country engagement framework.

Apart from Pakistan, multiple countries have received GCDA reports through this framework, including Sri Lanka, Zambia, and Cameroon. Reports reveal that ten more reviews are ongoing, with a few still under consideration.

Once the review is complete in Pakistan, Islamabad will be required to reveal its results. Islamabad has also pledged to amend legislation to empower the National Accountability Bureau (NAB) only if the Supreme Court gives its approval. If passed, the amendments will allow NAB to tackle growing instances of money laundering and corruption.