IMF shares draft MEFP with Pakistan as talks enter final stretch toward staff-level agreement
The IMF's visiting review mission has shared the first draft of the Memorandum of Financial and Economic Policies with Islamabad, as both sides negotiate toward a staff-level agreement, with the power-sector circular debt and subsidy reform topping the agenda.
The International Monetary Fund’s visiting review mission has shared the first draft of the Memorandum of Financial and Economic Policies (MEFP) with Pakistani authorities, as negotiations enter their final stretch toward a staff-level agreement (SLA).
According to reports in The News and Geo News, both sides are now working to finalise the memorandum, with the mission expected to remain in Islamabad until about the middle of next week. If consensus is not reached on the MEFP by then, talks will continue virtually.
The Fund flagged a breach of the power-sector circular debt target, with the stock reaching Rs1,675 billion (Rs1.675 trillion) by end-June 2026. The government budgeted Rs830 billion in power subsidies for FY27, and the IMF has asked for the elimination of cross-subsidies on electricity consumption up to 200 units, to be replaced with targeted support through the Benazir Income Support Programme (BISP) from January 2027.
On the fiscal side, the FBR’s annual tax collection target of Rs15,264 billion remains unchanged, with the board having exceeded its first-quarter target by Rs27 billion, so no revision was requested.
The IMF also pushed for a higher current account deficit projection of up to $4 billion for FY27, against the Finance Ministry’s estimate of around $2.7 billion and the NEC Annual Plan’s $3.6 billion.
Sovereign Wealth Fund legislation is expected to be approved by Parliament as part of the agreed reform programme.
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