MediumIV Macro Policy & Sovereign Debt23 September 2026, Wednesday
Pakistan and the IMF open review talks on the 7 billion dollar EFF in Karachi; a tranche of about 1.2 billion dollars is on the table
An IMF mission began technical talks with the State Bank of Pakistan on 23 September. If successful, Pakistan will receive about 1 billion dollars from the EFF and 200 million dollars from the climate facility; the talks are expected to last around two weeks.
According to a ProPakistani report dated 23 September, the IMF mission is holding the first round of the review of the 7 billion dollar Extended Fund Facility (EFF) in Karachi with the State Bank of Pakistan (SBP), with inflation, monetary policy and the exchange rate on the agenda. The same report states that this round also covers a new Article IV consultation, the last having taken place in September 2024. According to a Daily Independent report dated 24 September, SBP officials briefed the mission on the current account deficit, the policy rate and the exchange rate; meetings with the Finance Ministry, the Federal Board of Revenue (FBR), the Energy Ministry and the privatisation unit will follow. Circular debt targets in the power and gas sectors and structural benchmarks are on the table.
According to the Daily Independent, if the talks conclude positively Pakistan will receive a total of about 1.2 billion dollars: about 1 billion dollars from the EFF and 200 million dollars from the climate facility. The newspaper writes that the foreign exchange reserve target of over 17 billion dollars has been met, foreign direct investment has increased and a Eurobond issue was completed successfully. The sources conflict on details: ProPakistani calls it the 4th review, the Daily Independent the 5th; for the mission's move to Islamabad, ProPakistani gives 28 September and the Daily Independent 25 September. The current dated value of the reserve figure could not be verified.
Talay assessment
Bottom line
Meeting the reserve target and Eurobond access strengthen Pakistan's negotiating position, but energy-sector circular debt and revenue collection targets are the real test of the review. The most likely path is for the two-week talks to end in a staff-level agreement in exchange for energy tariff and tax measures.
Likely effects
- Pakistan's external financingPositive1–6 months
Release of the 1.2 billion dollar tranche would support the confidence of other creditors and Eurobond investors and preserve the reserve buffer.
- Energy pricesNegative1–6 months
Circular debt targets could bring fresh adjustments to electricity and gas tariffs, adding pressure on inflation and household budgets.
- Türkiye–Pakistan tradePositive1–6 months
Continuation of the IMF programme keeps Pakistan's access to foreign currency stable, limiting receivables risk for Turkish contractors and exporters.
Possibilities, ranked
- 1Staff-level agreement65%
Talks end in early October with a staff-level agreement in exchange for energy and tax commitments, and the tranche goes to the IMF board for approval.
Watch: The phrase 'staff-level agreement' in the IMF's end-of-mission press statement
- 2Delay pending extra measures25%
The IMF demands additional measures over the FBR revenue shortfall or circular debt, and the agreement is delayed by weeks.
Watch: Any Finance Ministry announcement of new taxes or tariff increases
- 3Deadlock10%
Serious deviations emerge on key benchmarks, and the tranche is deferred to the next review.
Watch: An IMF statement that the mission left without an agreement
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Tranche on the table▲ ~$1.2 billion
- EFF size▲ $7 billion
- Reserve target▲ over $17 billion