ISLAMABAD: The $6 billion loan package for Pakistan approved by the International Monetary Fund last week will require “very ambitious” fiscal measures and sustained commitment for the bailout to succeed, IMF officials said on Monday.
The three-year agreement approved by the IMF board last week, Pakistan’s 13th bailout since the late 1980s, has seen a sharp drop in the value of the rupee currency after the central bank agreed to a “flexible, market-determined exchange rate.”
It also foresees structural economic reforms and a widening of the tax base to boost tax revenues that are currently estimated to account for less than 13% of gross domestic product (GDP) by 4-5 percentage points.
With slowing growth, a budget deficit which has climbed to more than 7% of GDP and currency reserves of less than $8 billion, or enough to cover 1.7 months of imports, Pakistan has teetered on the edge of a debt and balance of payments crisis.
Ernesto Ramirez Rigo, the Fund’s mission chief for Pakistan said the program targets were tough but Prime Minister Imran Khan’s government, which came to power last year vowing not to turn to the IMF, was committed.
“We certainly think that debt sustainability under the program will be assured,” he told a conference call with reporters, adding that it would require “very ambitious” fiscal consolidation, mainly through improved revenue collection.
Pakistan has a notoriously narrow tax base, with less than 1% of its 208 million population filing income tax returns, a vast informal economy and several key sectors of the official economy largely exempt from tax.
The IMF loan and the associated package of reforms that goes with it will unlock another $38 billion in loans from other international partners but commitment by Pakistani authorities in pushing through reform was essential, Ramirez Rigo said.
“Consistency and sustained implementation is key.”
The 2020 budget, passed last month, approved tax measures worth some 1.7% of GDP to help cut the deficit and Pakistan has promised a multiyear effort to overhaul its tax and budget system to put its public finances on a firmer footing.
A central part of the program will involve cleaning up accumulated debts in the power and gas sectors and in loss-making state enterprises including Pakistan International Airlines, Pakistan Steel Mills, and Pakistan Railways.
Losses built up in the power sector now amount to the equivalent of 4% of GDP, posing a serious fiscal risk, while losses in the big three state enterprises amount to 2% of GDP, the IMF said in a report on the package.
The tough conditions of the package, which has already seen interest rates hiked by 150 basis points and which will see a raft of tax loopholes closed, has already drawn resentment among households facing inflation running at around 9%.
Ramirez Rigo said there was a risk that the difficulties of implementing some of the policies in the package were “more complicated than we have assumed” and that there would be problems in building consensus behind the reforms.
He also said any sharp rise in oil prices could unbalance the reform drive given Pakistan’s heavy dependence on imported energy.
IMF says Pakistan bailout sets ambitious fiscal targets
IMF says Pakistan bailout sets ambitious fiscal targets
- The Fund says the program targets are tough but PM Khan’s government is committed
- IMF official says any sharp rise in oil prices could unbalance the reform drive given Pakistan’s heavy dependence on imported energy
Pakistan says four militants killed in Balochistan operation near Iran border
- Military says those killed belonged to the Pakistani Taliban, a group mainly active in northwestern Khyber Pakhtunkhwa
- Operation comes after October border clashes with Afghanistan that led Pakistan to shut crossings and tighten security
ISLAMABAD: Pakistan’s military said on Saturday it killed four militants during an intelligence-based operation in Panjgur district in southwestern Balochistan, near the border with Iran, accusing them of belonging to the Pakistani Taliban.
The group, also known as the Tehreek-e-Taliban Pakistan (TTP) and described as Fitna al Khwarij by Islamabad, has largely operated in northwestern Khyber Pakhtunkhwa along Pakistan’s border with Afghanistan. Pakistan has frequently accused Afghanistan’s Taliban-led government of sheltering TTP leaders and fighters, allegations Afghan officials deny.
Islamabad has also accused India of supporting militant activity in Pakistan’s western provinces of Khyber Pakhtunkhwa and Balochistan, though New Delhi has rejected the charge in the past.
“On 26 December 2025, security forces conducted an intelligence based operation in Panjgur District of Balochistan, on reported presence of Khwarij belonging to Indian proxy, Fitna al Khwarij,” the military’s media wing, Inter-Services Public Relations (ISPR), said in a statement.
“During the conduct of operation, own forces effectively engaged the Khwarij location, and after an intense fire exchange, four Indian sponsored Khwarij were sent to hell,” it added.
ISPR said weapons, ammunition and explosives were recovered from the militants, whom it said had been involved in multiple attacks in the area. It added that follow-up search operations were under way to clear the area of any remaining fighters.
The operation comes amid heightened tensions along Pakistan’s northwestern frontier following fierce border clashes with Afghan forces in October, as a spike in violence in Khyber Pakhtunkhwa prompted Pakistani officials to suspect cross-border militant activity originating from Afghanistan.
Dozens of people were killed on both sides during the clashes, with Pakistan shutting down major border crossings and stepping up security along its porous frontier.
Balochistan, Pakistan’s largest but least populated province, has for years faced a separatist insurgency led by groups such as the Balochistan Liberation Army, while TTP-linked attacks in the province have been less frequent but have occurred in the past.
Prime Minister Shehbaz Sharif praised the security forces for the operation in Panjgur, his office said in a statement.
“The prime minister paid tribute to the security forces for eliminating four Indian-backed terrorists,” it said, adding that Sharif vowed to “crush the nefarious designs of the enemies of humanity” and said the entire nation stood with the armed forces in the fight against militancy.
Sharif said Pakistan remained fully committed to the complete eradication of all forms of terrorism from the country, the statement added.
