Spokesperson credits EFF reforms for stabilising inflation ahead of crucial review
IMF Communications Director Julie Kozack addressing a press briefing on Thursday. PHOTO: SCREENGRAB
ISLAMABAD:
The International Monetary Fund (IMF) has acknowledged a marked improvement in Pakistan’s economic outlook, stating that policy efforts under its Extended Fund Facility (EFF) have helped stabilise the economy, contain inflation and rebuild confidence, as the country prepares for a fresh round of review talks later this month.
Speaking at a press briefing in Washington, IMF Communications Director Julie Kozack said an IMF staff team will visit Pakistan from February 25 to conduct discussions on the third review under the Extended Fund Facility (EFF) and the second review under the Resilience and Sustainability Facility (RSF).
Kozack described Pakistan’s fiscal performance in the 2025 financial year as “strong”, noting that the country has achieved a primary fiscal surplus of 1.3% of gross domestic product (GDP), a figure that aligns with agreed programme targets.
She added that headline inflation has remained relatively contained. In a significant development, she added, Pakistan recorded its first current account surplus in 14 years during the 2025 financial year, signalling an improvement in external sector stability.
The IMF said these outcomes reflect the impact of reforms undertaken within the framework of the EFF programme. The forthcoming review discussions will assess Pakistan’s progress on reform benchmarks and determine the next steps regarding disbursements, said the spokesperson.
An IMF mission led by Mission Chief Iva Petrova is expected to arrive in Karachi on February 25 for discussions with the State Bank of Pakistan (SBP) before proceeding to Islamabad. Formal talks with federal and provincial authorities are scheduled to begin on March 2 and conclude around March 11.
Upon successful completion of the review, Pakistan would become eligible for the release of about $1bn under the EFF and a further $200m under the RSF by the end of April.
Kozack also referred to the recently published Governance and Corruption Diagnostic Report on Pakistan, which outlines proposals for structural reforms. These include simplifying tax policy design, improving asset declaration transparency and levelling the playing field in public procurement.
The IMF has placed particular emphasis on increasing simplicity and transparency in the tax system and strengthening oversight in government procurement processes. Simplifying tax policy has been identified as one of the most important reform priorities under the programme.
The review will also examine implementation of the Governance and Corruption Diagnostic recommendations and the National Fiscal Pact. Performance up to end-December 2025 has largely remained on track, though revenue shortfalls were noted, with authorities indicating these could narrow following a recent super tax ruling by the Federal Constitutional Court in the government’s favour.
The Extended Fund Facility is a longer-term IMF lending arrangement aimed at helping countries address deep-rooted economic weaknesses and medium-term balance-of-payments challenges. According to the Fund, Pakistan’s policy measures under the programme have contributed to stabilisation and renewed confidence among international financial institutions.
