ISLAMABAD: Significant progress has been made toward a staff-level agreement between Pakistan and the International Monetary Fund under the Extended Fund Facility and the Resilience and Sustainability Facility, sources said.
According to officials, the IMF has shared a draft of the Memorandum of Economic and Financial Policies (MEFP) with the government, marking a key step toward finalizing the agreement.
The Ministry of Finance has circulated the draft among relevant ministries and divisions, where consultations are currently underway to build consensus.
Sources said the staff-level agreement is expected once both sides finalize the MEFP. Following agreement on the document, Pakistan will issue a Letter of Intent (LoI), to be signed by the finance minister and the governor of the State Bank of Pakistan, committing to the implementation of agreed reforms.
The IMF has proposed new performance targets for multiple institutions, including the ministries of finance, energy and petroleum, as well as the Federal Board of Revenue, National Accountability Bureau, Oil and Gas Regulatory Authority, National Electric Power Regulatory Authority, Securities and Exchange Commission of Pakistan, Auditor General of Pakistan, and provincial governments. The framework also includes measures related to the taxation of agricultural income.
Meanwhile, an IMF technical mission is expected to visit Pakistan by the end of April to initiate discussions on the federal budget for the next fiscal year. The delegation is likely to remain in the country through May, assisting authorities in aligning the 2026–27 budget with IMF projections.
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However, discussions on resolving circular debt in the gas sector remain inconclusive. Sources said the government’s plan has not yet been incorporated into the MEFP due to pending consensus with the IMF.
Pakistan has proposed increasing the Petroleum Development Levy by Rs3 to Rs5 on petroleum products as part of efforts to manage the issue. The country’s gas sector circular debt currently stands at around Rs3,180 billion.
The government has prepared a strategy to settle approximately Rs1,700 billion of this debt over the next six years, partly through dividends from gas companies. While the proposal has received approval from the Prime Minister’s Office and the Ministry of Finance, negotiations with the IMF are ongoing to finalize the mechanism.
