Islamabad, Pakistan: Pakistan’s ongoing negotiations with the International Monetary Fund (IMF) have not resulted in a staff-level agreement, dealing a setback to the country’s efforts to stabilize its fragile economy. Despite several rounds of discussions, the two sides have not been able to finalize terms required for the next stage of the loan program.
Because of this delay, the third review of the IMF’s $7 billion support package has not been completed. As a result, the next $1 billion installment that Pakistan was expecting under the program will not be released for now.
Discussions Expected to Continue
The IMF has indicated that dialogue with Pakistani authorities will continue in the coming days. The goal is to bridge policy differences and eventually reach a staff-level agreement that would allow the release of funds.
IMF officials have expressed concern about Pakistan’s widening fiscal gap and emphasized the need for stronger economic reforms. According to IMF mission chief Eva Petrova, the talks made some progress but additional discussions are required before a final agreement can be reached.
Impact of Global Developments on Pakistan’s Economy
The IMF also said it will assess how recent global developments could affect Pakistan’s economic outlook and the Extended Fund Facility (EFF) program currently supporting the country.
Pakistan is already facing rising economic pressure due to increasing global energy prices. The ongoing tensions involving Iran have pushed energy costs higher and disrupted supply routes, including concerns around the Strait of Hormuz, a key channel for global oil shipments.
Loan Installments Still Uncertain
Under the EFF arrangement, Pakistan was expecting approval of the fourth installment of $1 billion along with about $220 million through the Resilience and Sustainability Facility (RSF). However, the staff-level agreement required for releasing these funds has not been finalized.
Economic Pressure on the Government
The delay puts additional pressure on the government led by Shehbaz Sharif. Without continued financial assistance from the IMF, Pakistan could face further economic instability.
The government hopes to boost economic growth in the coming years, but IMF officials have cautioned that the country must first stabilize its finances before pursuing rapid expansion.