The International Monetary Fund (IMF) mission began discussions with Pakistani authorities for the first review of the $7 billion Extended Fund Facility (EFF).
The IMF’s nine-member delegation, led by Nathan Porter, met with the government’s economic team, headed by Finance Secretary Imdad Ullah Bosal. The review, which will continue for two weeks, will assess Pakistan’s economic performance for July to December 2024, with a successful outcome unlocking the next $1 billion tranche.
Discussions are being held in two phases, starting with technical evaluations, followed by policy-level talks. The 2025-26 federal budget—currently under formulation—will also come under review.
The IMF delegation is engaging with key institutions, including the Finance Ministry, State Bank of Pakistan (SBP), Federal Board of Revenue (FBR), Oil and Gas Regulatory Authority (OGRA), National Electric Power Regulatory Authority (NEPRA), and the Planning Commission.
Separate meetings are scheduled with officials from Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan.
Meanwhile, the Power Division has asserted that all structural benchmarks agreed upon with the IMF are on track, including the privatisation of Power Distribution Companies (Discos).
An official stated that a Financial Advisor has been appointed to facilitate the process, and steps toward privatisation have begun. Another key IMF target was limiting circular debt to Rs461 billion by December 2024. While officials claim better-than-expected performance in managing the debt burden, they have yet to disclose specific figures.
Reforms in the National Transmission and Dispatch Company (NTDC) are also underway, with the entity being split into National Grid Company Projects (NGC Projects) and National Grid Company Assets (NGC Assets).
Additionally, a proposal to merge the Central Power Purchasing Authority’s (CPPA) market operations with NTDC’s system operations to establish an Independent System and Market Operator (ISMO) has been approved and is moving toward finalisation.
The government has also implemented Quarterly Tariff Adjustments (QTAs), with hearings for the second quarter already completed. The Competitive Trading Bilateral Contract Market (CTBCM), a key reform aimed at transitioning toward a competitive electricity market, remains in progress.
Officials say that the revised Integrated Generation Capacity Expansion Plan (IGCEP)—which will clarify available capacity for the competitive market—is currently under review and will be submitted to NEPRA soon.
Among other measures, the shift of Captive Power Plants (CPPs) to the national grid has been achieved through increased gas rates and levies. Additionally, wheeling charges for electricity transmission, initially estimated at Rs26/kWh, have been revised downward to Rs12/kWh. However, Power Division officials suggest that the final rate is still under consideration, as it must align with the existing tariff structure.
Despite these developments, some IMF conditions remain unfulfilled. According to the Fund’s latest Staff Report, Pakistan had committed to preparing two Discos for privatisation by January 2025 by updating tariff guidelines, resolving employee concerns, and launching a public communication campaign. These actions remain pending, as do commitments to privatise inefficient power generation companies (Gencos) and convert coal-fired power plants.
While the IMF has shown flexibility on certain reforms, it remains firm on structural benchmarks and indicative targets. Government officials acknowledge some delays but insist that most gaps have now been addressed.
