By Staff Reporter
ISLAMABAD: Finance Minister Muhammad Aurangzeb struck an upbeat note on the country’s push for a staff-level agreement with the International Monetary Fund, describing recent talks as “constructive” and insisting there are no “showstoppers” in the way.
Speaking virtually to a Saudi business delegation in Islamabad on Friday, Aurangzeb said the engagement with the IMF mission had been productive, with only a handful of issues left to resolve. “We have had very constructive engagement with the [IMF] mission here,” he told the group, which arrived in Pakistan on Oct. 7. “We have a few outstanding issues, from my perspective, no showstoppers.”
The minister’s comments come as Islamabad races to finalize a pact during his upcoming trip to Washington, where he’ll join State Bank of Pakistan Governor Jameel Ahmad and other officials for the IMF-World Bank’s annual meetings starting this weekend. “We will continue these discussions virtually tonight, into the weekend, and hopefully early [next] week when the [State Bank of Pakistan] governor, finance secretary and myself are in Washington,” Aurangzeb said. “We hope to get moving with the staff-level agreement.”
Authorities are banking on wrapping up the deal, which would unlock about $1.2 billion in disbursements from the Fund’s Extended Fund Facility and Resilience and Sustainability Facility next month, subject to board approval. The optimism hinges on hashing out details around the external account balance, verified flood damages and fiscal tweaks across federal and provincial books.
The IMF team, which wrapped a two-week visit to Karachi and Islamabad on Oct. 8, left after circulating a draft Memorandum of Economic and Financial Policies. “We were at the cusp of finalising the SLA, but two crucial tables that form part of the MEFP required further adjustments,” an official said, noting that a rebound in foreign remittances has fortified Pakistan’s case on the current account.
The central bank, meanwhile, will hold its guard up on monetary policy amid resurgent inflation, while flood losses undergo final vetting. In its end-of-mission statement, the IMF flagged “significant progress” on the second review under the 37-month, $7 billion EFF and the first under the 28-month, $1 billion RSF. Programme execution “remains strong, broadly aligned with the authorities’ commitments,” the lender said, praising advances in fiscal consolidation to buttress public finances during flood recovery, inflation control via tight policy, energy sector fixes through tariff hikes and reforms, and structural shifts to curb state overreach while boosting governance.
RSF talks zeroed in on climate-resilience builds. The Fund reserved special kudos for the power division, where Secretary Dr. Fakhre Alam Irfan’s team cleared nearly every performance yardstick, a rarity in the program. That said, the IMF cautioned that keeping the sector afloat will require swift interventions, like tariff recalibrations. The government, in turn, pledges to dispatch subsidies on time, including settling provincial bills from flood-zone consumer relief.
Provinces must still nail cash surplus aims, with carve-outs for confirmed flood hits, while federal spending stays on a short leash, especially development outlays, which are paused in ravaged areas. The Federal Board of Revenue is gearing up to trim its revenue goal, with backstop measures teed up for Jan. 1, 2026, to cover shortfalls. Public debt figures, from fixed-rate bonds to sukuk and maturities, are humming along within limits.
For Pakistan, still nursing wounds from 2022’s floods and a near-default scare, the tranche would be a shot in the arm, padding reserves at around $19 billion and easing import strains. Remittances have perked up, but September inflation rose sharply to 5.6% from 3% in August keeps the policy dial restrictive, and power sector debt topping Rs2.7 trillion looms large alongside provincial fiscal drifts.
Launched in July 2024 after tense negotiations, the program has tallied successes in tax hauls and subsidy trims, bolstered by bridge financing from Riyadh and Beijing. A sealed deal could thaw yields above 20% on recent sukuk sales and coax investors back, signaling Islamabad’s reform momentum is holding.
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