IMF board approves $7bn loan programme for Pakistan [Post Updated #474]

[Bhaijaan]

Islamabad says surge in aircraft orders after India standoff could end IMF reliance

Defense Minister Khawaja Asif on Tuesday said Pakistan has witnessed a surge in aircraft orders after a four-day military standoff with India last year and, if materialized, they could end the country’s reliance on the International Monetary Fund (IMF).

The statement came hours after a high-level Bangladeshi defense delegation met Pakistan’s Air Chief Marshal Zaheer Ahmed Baber Sidhu to discuss a potential sale of JF-17 Thunder aircraft, a multi-role fighter jointly developed by China and Pakistan that has become the backbone of the Pakistan Air Force (PAF) over the past decade.

Fighter jets used by Pakistan came into the limelight after Islamabad claimed to have shot down six Indian aircraft, including French-made Rafale jets, during the military conflict with India in May last year. India acknowledged losses in the aerial combat but did not specify a number.

Many countries have since stepped up defense engagement with Pakistan, while delegations from multiple other nations have proposed learning from Pakistan Air Force’s multi-domain air warfare capabilities that successfully advanced Chinese military technology performs against Western hardware.

“Right now, the number of orders we are receiving after reaching this point is significant because our aircraft have been tested,” Defense Minister Asif told a Pakistan’s Geo News channel.

“We are receiving those orders, and it is possible that after six months we may not even need the IMF.”

Pakistan markets the Chinese co-developed JF-17 as a lower-cost multi-role fighter and has positioned itself as a supplier able to offer aircraft, training and maintenance outside Western supply chains.

“I am saying this to you with full confidence,” Asif continued. “If, after six months, all these orders materialize, we will not need the IMF.”

Pakistan has repeatedly turned to the IMF for financial assistance to stabilize its economy. These loans come with strict conditions including fiscal reforms, subsidy cuts and measures to increase revenue that Pakistan must implement to secure disbursements.

In Sept. 2024, the IMF approved a $7 billion bailout for Pakistan under its Extended Fund Facility (EFF) program and a separate $1.4 billion loan under its climate resilience fund in May 2025, aimed at strengthening the country’s economic and climate resilience.

Pakistan has long been striving to expand defense exports by leveraging its decades of counter-insurgency experience and a domestic industry that produces aircraft, armored vehicles, munitions and other equipment.

The South Asian country reached a deal worth over $4 billion to sell military equipment to the Libyan National Army, Reuters report last month, citing Pakistani officials. The deal, one of Pakistan’s largest-ever weapons sales, included the sale of 16 JF-17 fighter jets and 12 Super Mushak trainer aircraft for basic pilot training.

https://www.arabnews.com/node/2628470/pakistan

Bhai, he's proven to be an idiot.
Pakistan is no aircraft manufacturer. You only assemble it with very little local manufacturing and absolutely no designing, tech integration.

Yes, still it makes sense for China friendly nations to purchase the same stuff via Pakistan as Pakistan's value addition comes from real war experience, able to provide training and maintenance. Its a good business model and Pakistan can make some money from it. Not enough though.

@Patriot Correct me if wrong dear

 

[Bhaijaan]

Apprentice meets master.

https://twitter.com/x/status/2014060493653041491

 

[Ball Blazer]

Pakistan 'well-positioned' for IMF review to unlock $1.2b fund: FinMin​

Pakistan is well-positioned for the International Monetary Fund (IMF) review of a $1.2 billion tranche, Finance Minister Muhammad Aurangzeb said on Wednesday, as the IMF mission begun discussions in Karachi.

The staff mission will conduct the third review under the IMF’s Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF), according to official statements from the IMF and Ministry of Finance. The IMF mission, led by Iva Petrova, arrived in Pakistan today and will remain until March 11 to complete the two reviews.

Successful completion of the reviews is expected to unlock approximately $1.2 billion — $1 billion from the EFF and $200 million from the RSF — by late April. “We are getting ready for the third review,” Aurangzeb said.

“It will cover both performance benchmarks and structural benchmarks, as well as a forward-looking assessment of the program.” He added that he will meet the IMF team in Islamabad for further discussions, describing them as a “meaningful conversation,” while noting it was too early to predict outcomes.


Earlier, the IMF highlighted that Pakistan’s policy measures have “helped stabilise the economy and rebuild confidence.”

Pakistan reported a primary fiscal surplus of 1.3% of GDP for FY25, in line with programme targets, while the State Bank projected inflation to remain within the 5-7% range for FY26 and FY27. Foreign exchange reserves reached $14.5 billion at the end of FY25, with a target of $18 billion by June.

Key discussion points will include circular debt management, recent electricity tariff adjustments, and implementation of the Governance and Corruption Diagnostic report and the National Fiscal Pact. Officials said the FY2026-27 federal budget framework will also be reviewed.

WB country director calls on FinMin Aurangzeb

Separately, the World Bank Country Director for Pakistan Bolormaa Amgaabazar met Aurangzeb at the Finance Division to discuss strengthening cooperation under the Bank’s Country Partnership Framework (CPF) and advancing key government reforms.

The talks covered population and human capital development, climate resilience, agriculture and energy sector reforms, and overall portfolio performance.


Aurangzeb emphasised the importance of effective implementation of the CPF, particularly in priority areas such as population management and climate change.

Both sides discussed improving coordination between federal and provincial governments, enhancing transparency in project design, and strengthening monitoring mechanisms to achieve intended development outcomes.

The World Bank reaffirmed its commitment to collaboration with Pakistan’s federal and provincial stakeholders.

Pakistan 'well-positioned' for IMF review to unlock $1.2b fund: FinMin | The Express Tribune

Fund to carry out the third EFF review and the second Resilience and Sustainability Facility review

tribune.com.pk

 

[hassan918]

IMF shares MEFP with Pakistan after outlining 2026-27 budget key points​

ISLAMABAD: The International Monetary Fund (IMF) has provided Pakistani authorities with the Memorandum of Economic and Financial Policies (MEFP) after finalising key outlines of the 2026–27 budget, while also urging more frequent revisions in oil prices.

Pakistan and the IMF have exchanged drafts of the MEFP to reach a staff-level agreement for the third review and the release of the fourth tranche under the $7 billion Extended Fund Facility (EFF) and $1.4bn under the Resilience and Sustainability Facility (RSF), The News reported.

The IMF has sought a budgetary and fiscal framework for the 2026-27 budget, envisaging the Federal Board of Revenue (FBR)’s tax collection target of Rs15.08 trillion. The current fiscal year’s FBR target has been revised downward from Rs13.79tr to Rs13.4tr for the end of June 2026. Earlier, the target had been reduced from Rs14.13tr to Rs13.79tr.

The IMF has also requested Islamabad to readjust petroleum, oil, and lubricant (POL) prices more frequently. The government had recently moved from reviewing prices fortnightly to weekly adjustments. The IMF seeks faster price resets, reflecting fluctuations in international markets.

Pakistani authorities are negotiating with the IMF to determine an appropriate timeframe for more frequent adjustments, but it remains unclear whether the Fund expects changes twice a week or on a daily basis, an official said.

Meanwhile, the Planning Commission’s affiliate, the Pakistan Institute of Development Economics (Pide), in its latest Policy Viewpoint authored by Dr Syed Hasanat Shah (Professor of Economics, Pide) and Wajid Islam (Research Economist, Pide), has warned that the ongoing Middle East crisis has evolved into a global economic shock, posing serious risks to Pakistan’s trade, energy security and external sector stability.

The study estimates that Pakistan’s direct exports to GCC countries could fall by $1.5 to $2bn if disruptions in the Strait of Hormuz persist. Imports from the region, particularly energy imports, could also decline sharply, disrupting domestic production and export activity.

At the same time, rising international oil prices could add $4.5bn to Pakistan’s import bill, further widening the current account deficit and increasing pressure on foreign reserves.

Pide's analysis underscores that Pakistan’s vulnerability is structural. The report notes that 81.6% of the country’s energy imports transit through the Strait of Hormuz, exposing the economy to severe supply shocks.

It further highlights that if global oil prices rise from $80 to $160 per barrel, Pakistan’s trade deficit could expand from $24bn to $41.8bn, while inflation may surge from 7.1% to 11.1%.

Beyond trade volumes, the study warns of broader spillover effects. Rising freight costs, war risk premiums, and disrupted shipping routes could significantly weaken Pakistan’s export competitiveness, particularly in the textile sector, which accounts for nearly 60% of total exports.

Moreover, any slowdown in remittances from GCC economies would further strain Pakistan’s balance of payments, given the country’s reliance on external inflows.

Source: GEO

 

[BouncerGuy]

On March 27, 2026, the IMF and Pakistani authorities reached a staff-level agreement following the third review of the Extended Fund Facility (EFF) and the second review of the Resilience and Sustainability Facility (RSF).

The agreement signals that Pakistan has met its program objectives despite global economic pressures. Once approved by the IMF Executive Board, Pakistan will gain access to approximately US$1.21 billion (SDR 914 million) in total disbursements.

Key Highlights of the Agreement

1. Financial Performance & Outlook

* Economic Momentum: Following a recovery in FY25, economic activity strengthened in early FY26. Inflation and current account balances remain under control, though Middle East conflicts pose risks via volatile energy prices.
* Immediate Funding: The approval will release ~$1.0 billion under the EFF and ~$210 million under the RSF, bringing total program disbursements to roughly $4.5 billion.

2. Fiscal & Revenue Reforms

* Tax Base Expansion: The Federal Board of Revenue (FBR) is implementing a "transformation plan" involving digital invoicing, production monitoring, and stricter taxpayer audits.

* Surplus Targets: The government is committed to a primary surplus of 1.6% of GDP for FY26, aiming for 2% in FY27.
3. Energy Sector Viability

* Cost Recovery: The IMF emphasized maintaining timely tariff adjustments to prevent the recurrence of "circular debt."
* Structural Changes: Plans include privatizing inefficient generation companies, transitioning to a competitive electricity market, and shifting toward renewable energy.

4. Social Protection & Monetary Policy

* BISP Support: To protect the vulnerable from food and fuel inflation, the authorities are expanding the Benazir Income Support Program (BISP) with inflation-adjusted transfers.

* Tight Monetary Stance: The State Bank of Pakistan (SBP) will maintain high interest rates as long as necessary to keep inflation within target ranges, using exchange rate flexibility as a primary shock absorber.

5. Climate Resilience (RSF Support)

* Green Initiatives: Pakistan is progressing on reforms for green mobility, decarbonizing transport, and disaster risk financing.

* Water & Infrastructure: Future focus includes enhancing water system resilience and aligning energy reforms with national mitigation goals.

Next Steps
The agreement now moves to the IMF Executive Board for final approval. The authorities must continue scaling back the state's footprint through SOE (State-Owned Enterprise) reforms and privatization to ensure long-term private sector-led growth.

 

[BouncerGuy]

IMF adds 11 new conditions

The International Monetary Fund (IMF) has loaded the $7 billion bailout package with nearly a dozen more conditions, including approval of the new budget by the National Assembly in line with the fund's agreement and amending laws governing special economic and technology zones.

The government has committed that parliament would approve the fiscal year 2026-27 budget in line with the IMF staff agreement. This is the second time the government has accepted such a condition under the current programme, as the last budget was also approved under IMF instructions.

Government sources told The Express Tribune that the staff-level agreement last month became possible after including 11 more conditions. With these additions, the total number of conditions imposed during the past less than two years has reached 75, encompassing all spheres of economic decision-making, governance and private sector development. Pakistan has assured the IMF that it would unveil a fiscally consolidated budget and would not target higher economic growth in the next fiscal year. The assurance was given by Finance Minister Muhammad Aurangzeb to the IMF's deputy managing director during his visit to Washington last week.

Sources said that by June 2027, Pakistan will enact amendments to the Special Economic Zones (SEZ) Act and the Special Technology Zones Authority Act (STZA) to phase out existing fiscal incentives and shift from profit-based to cost-based incentives. The country will also amend these laws to withdraw the authority of the Board of Approvals, the Board of Investment and the SEZ authorities in granting tax incentives. The legal changes will be made to the satisfaction of the IMF to completely phase out all existing fiscal incentives to STZs by 2035.

The government will also prohibit export processing zones from selling their goods in the domestic market. This restriction will be implemented by September this year. Industries located in these zones are often accused of selling a significant chunk of their production locally to evade taxes.

The government accepted this new condition in the middle of the National Assembly Standing Committee on Finance's action to amend the SEZ law last week without discussing it thoroughly. The government will give 6,000 acres of land in Karachi on lease to developers for SEZs without charging any money, said Investment Minister Qaiser Sheikh after the meeting. Any developer can get up to 1,000 acres on lease, but the terms have not yet been finalised. The law also bars courts from taking cognisance of commercial legal disputes related to these zones.

Pakistan has also assured the IMF that it remains committed to not introducing new zones until the outcome of negotiations on creating exceptions for notifying new STZs in priority sectors and phasing out all current by 2035, with a view to leveling the playing field for investment and strengthening the business environment nationally. Out of the $7 billion, the IMF has so far disbursed $3 billion. The fourth tranche of $1 billion is expected to be released in the first week of May.

PRR

According to another new condition, by June next year, the government will set up the Pakistan Regulatory Registry to improve the business climate. The registry will be a comprehensive and legally authoritative source on business regulations, starting with federal government and Islamabad Capital Territory regulations and later extended to all provincial regulations. The IMF is also pushing Pakistan to ease foreign exchange restrictions. As a result, the central bank has committed to developing a roadmap for the gradual removal of these restrictions.

Energy prices

The government has also accepted at least three new conditions to regularly adjust the prices of electricity and gas. Such conditions were already in place but the global lender thought to add three more to the long list to make sure that the government does not go back on its commitment to increase electricity and gas prices.

These new conditions state that the Pakistani authorities remain committed to timely notifications of quarterly tariff adjustments (QTAs) and automatic monthly fuel charges adjustments (FCAs). . In January 2027, Pakistan will fully implement the annual electricity price, reflecting the impact of recent global energy market volatility. The government will also notify semi-annual gas tariff adjustments in line with cost recovery, as determined by OGRA, first on July 1, 2026 and February 15, 2027.

FBR

According to another condition, by June this year, the FBR will centralise the audit case selection process and adopt a standardised audit manual, a published audit policy and a comprehensive audit and integrity risk register. The audit policy will require mandatory follow-up of all high-risk cases identified through the risk management system.

PPRA

By September this year, the government will amend Public Procurement Regulatory Authority rules to eliminate state-owned enterprise preferences in awarding public procurement contracts without competition. The new rules will be implemented subject to federal cabinet approval.

BISP

To offset the impact of higher energy prices and taxes, the government has accepted an IMF condition to increase Benazir Income Support Programme beneficiaries' compensation from Rs14,500 to Rs19,500, beginning in January 2027. This will cover projected inflation for 2026 and an additional increase in generosity, bringing quarterly benefits closer to 15% of the lowest family income quintile's consumption basket.

IMF adds 11 new conditions | The Express Tribune

IMF adds 11 new conditions

tribune.com.pk

 

[Bhaijaan]

We might not the IMF anymore.

Saudis have deposited 3 billion USD with our central bank.

8 billion USD of investments are on the way and there are talks of a Saudi backed PSL