Pakistan: Second Review Under the Extended Arrangement Under the Extended Fund Facility, First Review Under the Resilience and Sustainability Facility, Request for a Waiver of Nonobservance of a Performance Criterion, and Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Pakistan

International Monetary Fund

No 2025/332, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper presents Pakistan’s Second Review under the Extended Arrangement under the Extended Fund Facility, First Review under the Resilience and Sustainability Facility, Request for a Waiver of Nonobservance of a Performance Criterion, and Modification of Performance criteria. Continued strong policy implementation has helped Pakistan weather several shocks this year. Growth was stronger than anticipated in FY25, but the recent floods moderately dampen the outlook for FY26. Financial conditions and external balances have remained favorable, with Pakistan posting its first current account surplus in 14 years in FY25 and reserve rebuilding continuing. Headline inflation has been contained despite some flood-related food price increases. The recent floods underscore the urgency of maintaining timely program implementation to continue to build resilience and support sustainable growth. The FY26 primary surplus target remains achievable while accommodating flood-related spending needs. The fiscal effort will be supported by continued progress on fiscal reforms to boost revenue mobilization, reduce debt, and create fiscal space for needed social, health, and education spending.

Keywords: foreign currency swap; cash transfer; net tax revenues; step recapitalization plan; revenue authorities; Natural disasters; Fiscal stance; Global; Middle East; Central Asia (search for similar items in EconPapers)
Pages: 117
Date: 2025-12-11
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