Pakistan is still talking with a visiting staff mission from the International Monetary Fund (IMF). These talks should finish on a note later this week. That will allow about $1.2 billion to be paid out under two programmes at the time – the $7 billion Extended Fund Facility (EFF) and the $1.4 billion Resilience and Sustainability Facility (RSF).
Informed sources say that Pakistan and the IMF are now finalising the Memorandum of Economic and Fiscal Policies (MEFP). They have already discussed the points of the biannual review.
After the draft exchanges finish, the staff mission headed by Ms Iva Petrova will likely end its visit in a day, official sources say. The Fund did not ask for anything, only for some adjustments to make up for past slippages. Pakistan’s revenue target is still the same. The focus is now on hitting the half‑yearly goal after a strong first‑quarter collection that already beat the target.
This news comes while Pakistan is trying hard to finish the liquefied gas (LNG) import plan for the next three winter months – December, January and February. The plan is difficult because the supply situation is tense, caused by the conflict between the US and Iran.
Gas companies and the petroleum division wanted 22 LNG cargoes for the three‑month period. The energy task force, led by Lt Gen Zafar Iqbal, said it would arrange no more than 10 or 12 cargoes, each about 100 million cubic feet. They will try their best using every logistical channel available.
Pakistan will show this plan to the Prime Minister for approval. Each spot cargo costs $100 million, and the plan also needs permission from the Ministry of Finance and the State Bank of Pakistan.
This issue is more important now because the LNG import plan will impact the account targets that the Ministry of Finance and the IMF have agreed on. Sources say that real LNG imports might be seven or eight cargoes over the winter months due to current market conditions. That would bring the result closer to the level that the Ministry of Finance wants.
Pakistan and the IMF have agreed to speed up work on targeted subsidies in the gas sector. They will use the social protection programme to keep gas‑sector debt down and will move BISP‑based subsidies for the poorest power consumers into the implementation phase. This will start in January of the year after the new base tariff is introduced.
The distribution companies have already filed tariff petitions while the talks were happening. They did this to show the IMF team that they are ready, according to sources.
I see that the government has assured the Fund that it will cut cross-subsidies from the sector and keep gas‑sector debt under control. Gas‑sector debt now reaches Rs3.6 trillion. Keeps rising. This debt includes Rs1.8 trillion in principal that must be paid plus almost the same amount in interest and late‑payment surcharges.
I notice that gas companies say the protected category for domestic consumers charging gas prices of Rs200‑350 per mmBtu has made the pricing gap bigger. Because of this, circular debt has grown. Only four of the 12 consumer slabs cover the cost of gas supply during winter. The other eight stay below breakeven rates for eight months even though fixed charges are high.
These actions are not yet called actions. The government may need to take steps between the end of the ongoing IMF talks and the Fund’s Executive Board meeting. That will help Pakistan handle the $1.2bn disbursement smoothly and ask for waivers for a few slippages that happened before the end‑June 2026 targets.
An IMF structural benchmark that the government promised requires a policy reform by end‑January 2027. The reform will replace the budgeted subsidy and cross‑subsidy system with a targeted budgeted subsidy framework for low‑income consumers through BISP.
The World Bank is helping the government link power consumers to the National Socio‑Economic Registry. The government has promised to finish the linkage and do validity checks by end‑November to set eligibility criteria.
The IMF is now also asking for transparency in the Inland Freight Equalisation Margin (IFEM). IFEM helps keep petroleum pricing the same across the country.
