Pakistan, IMF begin policy-level talks for $1b tranche

Pakistan and the International Monetary Fund (IMF) have initiated policy-level discussions for the next tranche of the $7 billion loan program. The review process is scheduled to continue until March 14.

According to the Ministry of Finance, the IMF delegation will evaluate Pakistan’s progress in implementing economic reforms outlined under the program’s conditions.

The ongoing policy-level talks between the two sides are focused on new revenue measures, energy sector reforms, and debt reduction strategies, sources said.

According to officials, discussions include imposing a surcharge of Rs2.80 per unit on electricity bills and introducing a carbon tax on petrol and diesel vehicles.

There is also consideration of levies on coal-powered plants as part of Pakistan’s broader effort to meet climate and fiscal commitments.

Tax reforms in the electric vehicle policy are under discussion, with the IMF expected to push Pakistan to expand its revenue base.

The privatisation of state-owned enterprises is also part of the agenda, with the IMF seeking concrete short-term plans.

Technical negotiations are expected to lead to a formal statement from the IMF, outlining key policy expectations.

Sources indicate that Pakistan may be required to take additional fiscal measures to meet the lender’s conditions.

The latest talks come as Pakistan prepares for the next fiscal year’s budget and seeks to reduce its circular debt in the power sector. The IMF has reportedly urged authorities to demonstrate stronger commitments before releasing the next tranche.

Last week, the IMF mission arrived in Pakistan to officially initiate discussions for the first review of the $7 billion Extended Fund Facility (EFF) secured last year.

According to the Ministry of Finance, the IMF delegation, led by Nathan Porter, met with Finance Minister Muhammad Aurangzeb in Islamabad. The meeting focused on the overall economic situation in the country.

Moreover, the federal government also presented a proposal to the IMF to revise electricity tariffs for solar panel owners using net metering.

The plan includes purchasing surplus electricity generated by solar users at a significantly lower rate, reducing it from the current Rs27 per unit to approximately Rs10 per unit.