IMF Performance Criteria Expected to be Met by Pakistan in Upcoming Review, According to Top Brass
The State Bank of Pakistan (SBP) Governor has announced that the central bank is ready to present its economic performance for the March and June 2025 quarters to the International Monetary Fund (IMF). This announcement comes as Pakistan prepares for a critical review of its economic status, scheduled for September 25, 2025.
The IMF's visit is part of the second semi-annual review of the $7-billion Extended Fund Facility (EFF), a financial aid programme aimed at supporting Pakistan's economic recovery. The review will assess Pakistan's performance against the Quantitative Performance Criteria (QPC) for the given quarters, with expectations of meeting all seven criteria.
However, the floods that have ravaged the country pose a significant challenge. The disaster has destroyed crops, livestock, and homes across Punjab province and is now pushing into Sindh. The floods have resulted in 972 reported deaths and are expected to cause fresh food inflation and deeper hardship in Pakistan.
Topline Securities, a financial research firm, expects a consensus on revised economic projections due to the floods. GDP growth is likely to be revised down to 3% from the initial 4%, while inflation is raised to 8% from an earlier estimate. The floods have also impacted the Federal Board of Revenue (FBR) tax targets, which are adjusted to Rs13.7-13.9 trillion from the earlier Rs14.13 trillion.
Despite these challenges, Topline Securities expects Pakistan to meet the QPC, including Net International Reserve and SWAP positions. However, it remains unclear whether all SBP-related targets have been achieved in the outgoing quarters.
The IMF's Resident Representative to Pakistan has stated that the review will be critical in assessing Pakistan's financial capacity to respond to the disaster. The government side's representation in these assessments will primarily come from the Ministry of Finance and SBP officials, who collaborate with the IMF team on fiscal and monetary policy adjustments during the review and negotiation phases.
Pakistan has already received over $2 billion in two instalments under the EFF. Successful completion of the review will pave the way for the IMF Board's approval of a $1 billion tranche. The government is also considering revising key economic projections due to the floods, with expectations of a potential decline in GDP and FBR revenue targets.
The primary balance numbers for FY25 are already in line with IMF targets, according to Topline Securities. However, data on government guarantees for FY25 have not been made public.
As Pakistan navigates these economic challenges, the country's resilience and capacity to recover from adversity remain a beacon of hope. The IMF review and subsequent aid will play a crucial role in supporting Pakistan's economic recovery and helping the nation overcome the impacts of the flood disaster.
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