IMF mission moves Pakistan review talks online after regional security escalation

An International Monetary Fund (IMF) staff mission shifted its Pakistan review talks to a virtual format on Monday after relocating to Istanbul under a security advisory issued by its headquarters amid escalating regional tensions.

The mission, led by Iva Petrova, had been holding in-person meetings in Islamabad as part of the third review of Pakistan’s $7 billion Extended Fund Facility and the second review of the $1.1 billion Resilience and Sustainability Facility. Discussions will now continue via video link between Istanbul and Islamabad, the Fund said in a statement.

The review, scheduled to conclude on March 11, is critical as Pakistan would become eligible for disbursements of about $1 billion under the EFF and $200 million under the RSF upon successful completion.

The formal kickoff meeting took place in Islamabad earlier in the day under Finance Minister Muhammad Aurangzeb. Both sides briefly discussed the evolving regional security situation and agreed to monitor developments while proceeding with the programme review.

The IMF team had begun engagements on February 25 in Karachi, holding meetings with the State Bank of Pakistan and members of the business community.

The ongoing review covers programme performance for the half-year ending December 31, 2025, and includes forward-looking policy commitments, including initial budget proposals and macroeconomic projections. Provincial finances, particularly agriculture income tax collection and governance-related reforms, are part of the assessment.

Procurement and accountability institutions are also expected to face scrutiny regarding institutional independence, capacity and performance.

Officials say overall programme implementation up to end-December 2025 has largely remained on track. Pakistan has met almost all quantitative performance criteria and is likely to comply with nearly all seven quantitative indicators on the technical side.

However, revenue shortfalls remain a concern, although authorities expect partial relief following a recent super tax ruling by the Federal Constitutional Court in the government’s favour. The tax-to-GDP ratio remains within agreed parameters.

Net international reserves are projected to stay slightly below the $7 billion benchmark for September 2025 and under $6 billion for December 2025 against a $6.5 billion target. Meanwhile, the central bank’s net domestic assets are estimated at Rs12.5 trillion to Rs13.5 trillion, below the ceiling targets of Rs14.9 trillion to Rs15.1 trillion for September and December 2025.

The power sector will also remain under review, particularly recent policy shifts affecting industrial tariffs and residential fixed charges, although circular debt levels are reported to be within target range.

Technical-level discussions with ministries and relevant entities will continue through the week, followed by policy-level talks early next week and a wrap-up meeting with the finance minister on March 11.