Pakistan to cut GDP, forex targets to secure IMF loan deal
Sources says Finance Ministry, Fund are holding virtual talks on staff-level agreement
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
Pakistan has requested the IMF for more time to publish a report on corruption assessment
Pakistan is expected to adjust its GDP growth and remittances targets to continue with the $7 billion International Monetary Fund (IMF) loan program, sources have told Nukta.
The Finance Ministry and IMF are holding daily virtual meetings to address outstanding issues that would unlock the next tranche of the loan program.
An IMF mission, which was in Islamabad till this week, met senior federal and provincial government officials to review Pakistan’s progress on economic restructuring goals agreed with the IMF.
The visit was expected to conclude with an announcement of the next loan tranche, but the mission, while praising Pakistan’s progress on key economic reforms, left without finalizing an agreement.
According to sources familiar with the negotiations, the Government of Pakistan is making strenuous efforts to secure the third tranche of the ongoing loan program as virtual talks with the IMF are being held daily.
The discussions are focused on finalizing a staff-level agreement under the $7 billion Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF).
Both sides are ironing out details regarding the draft Memorandum of Economic and Financial Policies (MEFP), which outlines Pakistan’s reform commitments and fiscal targets.
A staff-level agreement will be reached once both sides agree on the MEFP draft, according to sources.
Islamabad has also assured the IMF of its intention to fulfill the remaining program targets and implement the agreed-upon reforms. These include sustained fiscal consolidation, tighter monetary policy to control inflation, regular adjustments to power tariffs, and governance-related reforms.
To reach a deal, Pakistani officials have proposed revisions to several key macroeconomic targets initially outlined in the FY2025–26 budget. The proposals include:
- • Lowering the GDP growth target from 4.2% to 3.5%
- • Reducing the foreign exchange reserves target from $17 billion to $14 billion
- • Adjusting the inflation target to 7–8%
- • Revising export targets downward due to flood-related agricultural disruptions
- • Cutting the revenue collection target by PKR 200 billion from the original PKR 14,100 billion
The Pakistani authorities have requested the IMF to allow additional time for the publication of the Corruption and Governance Diagnostic Assessment Report, with proposed revisions expected before its release.
The IMF team has flagged several external risks, including geopolitical tensions, volatile global commodity prices, and weakened investor confidence.
In response, Pakistan has committed to contingency plans, such as further adjustments to energy prices, to buffer against external shocks.
Despite challenges, the IMF has acknowledged that program implementation remains broadly on track. “Significant progress has been made in multiple areas, including fiscal consolidation, monetary policy alignment, energy sector viability, and structural reforms,” an official source noted.
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