Spokesman credits EFF reforms to stabilize inflation ahead of crucial review
IMF Communications Director Julie Kozack spoke at a press briefing on Thursday. PHOTO: SCREENGRAB
ISLAMABAD:
The International Monetary Fund (IMF) has acknowledged a marked improvement in Pakistan’s economic outlook, saying policy efforts under its Extended Fund Facility (EFF) have helped stabilize the economy, curb inflation and rebuild confidence as the country prepares for a new round of renegotiations later this month.
Addressing 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 fiscal year 2025 as “strong” and noted that the country has achieved a primary fiscal surplus of 1.3% of gross domestic product (GDP), a figure consistent with agreed program 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 in fiscal year 2025, signaling an improvement in external sector stability.
The IMF said that these results reflect the impact of reforms implemented under the EFF program. The upcoming review discussions will assess Pakistan’s progress on reform benchmarks and determine next steps in terms of disbursements, the spokesman said.
An IMF mission led by Chief of Mission 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 2nd and conclude around March 11th.
After successful completion of the review, Pakistan will be eligible to release about $1 billion. under the EFF and an additional $200m. under the RSF before 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 the design of tax policy, improving transparency in asset declarations and leveling the playing field in public procurement.
The IMF has placed particular emphasis on increasing the simplicity and transparency of the tax system and strengthening the supervision of public procurement processes. A simplification of tax policy has been identified as one of the main reform priorities under the programme.
The review will also examine the implementation of the recommendations on Governance and Corruption Diagnostics and the National Fiscal Compact. Performance up to the end of December 2025 has largely remained on track, although revenue shortfalls were noted, with authorities indicating these could be narrowed following a recent super tax ruling by the Federal Constitutional Court in favor of the government.
The Extended Fund Facility is a long-term IMF lending facility aimed at helping countries address deep-rooted economic weaknesses and balance of payments challenges in the medium term. According to the foundation, Pakistan’s policy measures under the program have contributed to stabilization and renewed confidence among international financial institutions.
