Anticipated Arrival of Team by End of Septemer for $1 Billion IMF Third Tranche: Aurangzeb
IMF Visit Paves Way for Pakistan's Economic Stabilisation
The International Monetary Fund (IMF) delegation is set to visit Pakistan by the end of September 2025, marking a significant milestone in the country's economic journey. This visit is scheduled to conduct an economic review under the $7 billion Extended Fund Facility (EFF), which, if successful, will unlock the release of the third tranche of $1 billion [1][2][4][5].
This loan program, approved in September 2024, aims to provide medium-term support to Pakistan's fragile external sector and promote structural reforms. So far, two tranches totaling $2 billion have been disbursed, and Pakistan is also receiving dedicated climate financing through the IMF’s Resilience and Sustainability Facility, with approximately $260 million expected by the end of September 2025 [1][3].
Economic Stabilisation and Growth
The IMF projects Pakistan’s GDP growth at 3.6% for fiscal year 2025-26, slightly below the government's target of 4.2%. However, recent data indicates a rebound to 2.4% growth with inflation retreating to single digits, aided by tight fiscal and monetary policies [2][5].
Debt Management and Structural Reforms
Despite a 41% rise in national debt, repayments remain on schedule. The government is pursuing reforms such as reducing bureaucracy, privatizing state-owned enterprises, expanding the tax base (including taxing agricultural income), and ongoing tariff reforms aiming to cut electricity prices—the first such reforms in 78 years. These efforts are geared toward improving fiscal sustainability and reducing vulnerability [4][5].
Investor Confidence
Key indicators like the Pakistan Stock Exchange have seen record highs, reflecting improved investor sentiment tied to the IMF program and economic reforms [4][5]. The reforms also aim to explore how to reduce the costs of raw materials and intermediate products to make Pakistan an export-led economy. There has been a record increase of 65,000 new investors who have come into the PSX over the last year [6].
Risks and Challenges
The IMF warns that despite progress, vulnerabilities remain due to a narrow tax base and structural challenges. Without continued reform efforts, Pakistan risks lagging behind peer countries [5].
In summary, the IMF visit and the anticipated $1 billion tranche disbursement are crucial for Pakistan’s ongoing economic stabilisation, supporting reforms and external financing needs while underlining the necessity for sustained adjustment to secure medium-term economic resilience [1][2][3][4][5].
Meanwhile, the business community celebrated Pakistan's 78th Independence Day with a flag hoisting ceremony and "Marka e Haq" celebrations [7]. The finance minister also mentioned that a benchmark for Sukuk bonds has been set, and company registrations' annual levels have gone above 250,000 [8]. National security and economic stability, according to the minister, are interdependent [9]. Debt servicing reached Rs1.0 trillion last year in Pakistan [10]. The minister also stated that the privatisation of state-owned enterprises is expected to accelerate this year, and Panda bonds would be issued by the end of the year [11].
[1] https://www.dawn.com/news/1682465 [2] https://www.thenews.com.pk/print/1091479-imf-to-visit-pakistan-by-end-september-for-review-under-eff [3] https://www.thenews.com.pk/print/1091391-imf-to-give-pakistan-260-million-climate-finance [4] https://www.dawn.com/news/1680606 [5] https://www.thenews.com.pk/print/1091047-imf-warns-of-vulnerabilities-despite-pakistans-progress [6] https://www.dawn.com/news/1680606 [7] https://www.thenews.com.pk/print/1091391-imf-to-give-pakistan-260-million-climate-finance [8] https://www.dawn.com/news/1680606 [9] https://www.dawn.com/news/1680606 [10] https://www.thenews.com.pk/print/1091047-imf-warns-of-vulnerabilities-despite-pakistans-progress [11] https://www.dawn.com/news/1680606
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