Pakistan likely to receive $2 billion from IMF

Pakistan likely to receive around $2 billion from the International Monetary Fund under Extended Fund Facility and Climate Financing, helping to boost foreign exchange reserves and stabilize the domestic currency.

The government has successfully convinced the International Monetary Fund to release funds under the Extended Fund Facility and Climate Financing in a single installment. The IMF is expected to hold its board of directors meeting sometime by the end of next month to approve the loans for the country, helping to boost foreign exchange reserves.

Since November 2024, the State Bank of Pakistan's foreign exchange reserves have fallen by nearly $940 million, settling around $11.097 billion for the week ending March 7, 2025.

The State Bank of Pakistan estimates that by June 30, 2025, foreign exchange reserves will reach around $13 billion. The reserves have gained primarily due to remittance inflows.

Overseas Pakistanis sent nearly $3.1 billion in February. In the first eight months of the current fiscal year, the average monthly remittance from overseas Pakistanis reached around $3 billion, compared to an average of around $2.5 billion in the last fiscal year.

IMF Expresses Satisfaction

The International Monetary Fund (IMF) has expressed satisfaction with the measures and reforms implemented by Pakistan to keep the economy on track. This paves the way for the approval of a $1 billion loan from international financial institutions, sources in the Ministry of Finance said on Friday.

The IMF conducted a two-week visit to review Pakistan's six-month economic performance.

During this period, several measures were taken, including addressing the thorny issue of agricultural tax imposed by all provinces and reducing subsidies in the energy sector.

The government has assured the IMF that it will collect taxes from the provinces, including imposing corporate tax on farm income.

Nathan Porter led the IMF team and met with officials from the Ministry of Finance, Ministry of Energy, Commerce, Federal Board of Revenue, State Bank of Pakistan, provincial officials, and foreign diplomats stationed in Pakistan.

The government has formulated rules and regulations for the agriculture sector, and the civil service act and right-sizing plan have also been presented to the IMF team.

Following the completion of the meetings, the IMF team will submit their presentation to the Board of Directors, who will review the assessment and decide on the approval of the $1 billion loan.

The IMF has urged the government to broaden the tax net by including retail, wholesale, dealers, and the real estate sector. While the IMF appreciated the rules governing agricultural tax, it asked the government to expedite tax collection.

The government proposed reducing tax rates on various sectors, including real estate and property transactions, to increase revenue collection and help prevent capital flight.

The government presented the latest data on tax filers, which has surpassed six million, a figure appreciated by the IMF. The government aims to further increase this number.

The government assured the IMF that it would provide much-needed protection to the social sector and take steps to reduce circular debt and losses incurred by state-run companies. Additionally, the government plans to accelerate the privatization process.

Moreover, the government informed the IMF that it would reduce subsidies in the energy sector, privatize companies in the power sector, and speed up the privatization of PIAC.