KARACHI: An International Monetary Fund (IMF) staff team will visit Pakistan from Feb. 25 to begin discussions on key program reviews, the lender said on Thursday, as authorities seek to lock in recent economic stabilization after a prolonged financial crisis.

The talks will cover the third review under Pakistan’s $7 billion Extended Fund Facility (EFF) bailout and the second review under the Resilience and Sustainability Facility (RSF), which supports countries dealing with climate vulnerabilities.

Pakistan has spent the past year implementing tough fiscal and structural reforms — including tax increases, subsidy cuts and a tighter monetary policy — to stabilize a fragile economy that faced record inflation, dwindling foreign reserves and default fears in 2023.

“We do have a staff team that is expected to visit Pakistan starting February 25th for discussions on the third review under the EFF and the second review under the RSF,” IMF communications director Julie Kozack said at a regular press briefing.

The IMF says the program aims to restore macroeconomic stability, rebuild external buffers and make Pakistan more resilient to climate shocks following devastating floods in recent years.

Kozack said Pakistan’s policy implementation had already produced measurable improvements.

“Pakistan’s policy efforts under the EFF have helped stabilize the economy and rebuild confidence,” she said.

She noted fiscal indicators were improving in line with program targets.

“Pakistan currently has a primary fiscal surplus of 1.3 percent of GDP in FY25, which was in line with program targets. Headline inflation has been relatively contained. And Pakistan posted its first current account surplus in 14 years in FY2025.”

Pakistani authorities have also cited improving macroeconomic trends. 

Governor State Bank of Pakistan Jameel Ahmad has said growth could reach about 4.75 percent in the fiscal year ending June, while inflation, which peaked above 38 percent in May 2023, has fallen sharply over the past year following interest rate hikes and fiscal tightening.

The IMF official added that governance reforms remain a major component of the program.

“The governance and corruption diagnostic assessment report was recently published,” Kozack said.

“It includes proposals for reforms, including simplifying tax policy design, levelling the playing field for public procurement, and improving the asset declaration transparency.”

The upcoming review will determine whether Pakistan remains eligible for continued disbursements under the bailout program and help reinforce investor confidence.

Analysts say the review is likely to pass but may involve difficult negotiations on fiscal discipline and energy policy.

“This is expected to be a smooth sailing, however questions might arise,” Shankar Talreja, head of research at Karachi-based Topline Securities Limited, told Arab News.

Experts say the IMF could question whether Islamabad consulted the lender before reducing electricity tariffs by about Rs4 per unit for export-oriented industries, a move designed to support manufacturing but with fiscal implications.

He also flagged a revenue gap.

“Pakistan has missed” the IMF’s revenue target by Rs336 billion ($1.2 billion), he said.

“Tax revenue shortfall which is one of the indicative targets which Pakistan has missed.”

Muhammad Waqas Ghani, head of research at JS Global Capital Limited., said the next review may be “tough”:

“Although (Pakistan’s) macroeconomic indicators have improved since the start of the program, the IMF is still expected to press firmly on energy reforms and circular debt before clearing the next tranche, which the government is likely to secure after tough negotiations.”