The International Monetary Fund (IMF) has called on Pakistan to scale back government intervention in the economy, enhance competition, and implement critical energy sector reforms to ensure its sustainability. The recommendations were made following a staff visit to Pakistan from November 12 to 15, 2024, led by IMF Mission Chief Nathan Porter.
In a statement released on Friday, Porter described the discussions with Pakistani authorities as “constructive,” focusing on policies aimed at reducing vulnerabilities and fostering sustainable growth.
“We agreed on the need to maintain prudent fiscal and monetary policies, expand revenue collection from untapped tax bases, and transfer greater social and development responsibilities to the provinces,” Porter stated. He highlighted that energy reforms and reduced state intervention would encourage the growth of a dynamic private sector.
The visit aimed to review Pakistan’s progress under the Extended Fund Facility (EFF) programme. During the discussions, the IMF team met senior officials from federal and provincial governments, the State Bank of Pakistan (SBP), and private sector representatives.
The IMF emphasized the importance of meeting fiscal targets, including achieving the tax revenue goal of PKR 12,970 billion for the current fiscal year. It urged the government to accelerate tax collection efforts, particularly on agricultural income, starting January 2025.
The mission also recommended strengthening the Finance Division’s capacity for macro-fiscal forecasting and improving budget synchronization processes. Additionally, the Fund advised introducing legal changes to limit the federal government’s discretionary use of supplementary grants while retaining some flexibility in budget execution.
The IMF commended Pakistan’s commitment to economic reforms under the EFF, which it said could pave the way for a more prosperous and inclusive economy. The next mission to review the EFF is scheduled for the first quarter of 2025.
Finance Minister Mohammad Aurangzeb participated in the final talks with the IMF team, which stressed adherence to tax targets and the National Fiscal Pact. The mission also encouraged measures to ensure robust programme implementation, which Porter said would improve living standards across the country.
IMF staff visits, a routine for countries under semi-annual programme reviews, aim to engage stakeholders on economic progress and reform implementation.
