MediumIV Macro Policy & Sovereign Debt28 September 2026, Monday
Pakistan and the IMF open formal talks on 1.2 billion dollars
Pakistan and the IMF began formal policy-level talks in Islamabad on 28 September for the 4th review of the 7 billion dollar programme. The mission, led by Iva Petrova, will stay for about 2 weeks. A positive outcome would unlock 1.2 billion dollars of new financing.
According to a ProPakistani report on 28 September, a successful review would bring about 1 billion dollars under the Extended Fund Facility (EFF) and 200 million dollars under the climate-focused Resilience and Sustainability Facility (RSF). The money could arrive in late November or early December. The talks will run into the first week of October. The same report said the 8-point agenda covers the Sovereign Wealth Fund and circular debt in the energy sector, meaning the chain-like build-up of unpaid bills. It also covers the incomplete liberalisation of the sugar sector, the current account, the primary surplus, foreign exchange reserves and the exchange rate.
According to a report in The Nation on 27 September, Pakistan has so far received a total of 4.8 billion dollars from the two programmes. The same report said Pakistan needs to make about 174 legal changes in taxation, energy, privatisation, the Sovereign Wealth Fund, sugar policy and Islamic banking. According to Daily Pakistan, the mission will discuss broadening the tax base with the tax administration and revenue-raising measures with the provinces. Units fighting money laundering and terrorist financing will also brief the mission.
Talay assessment
Bottom line
The talks are on schedule, and the most likely outcome is a staff-level agreement in mid-October. However, the roughly 174 legal changes and politically sensitive issues such as sugar and energy keep alive the risk that the deal is tied to additional prior actions. High oil prices are an extra source of pressure on the current account and reserve targets.
Likely effects
- Pakistan external financingPositive1–6 months
The 1.2 billion dollar tranche would support the reserve buffer and could also release other multilateral loans.
- Pakistan domestic politicsNegative1–6 months
Conditions on the tax base and energy tariffs may require the government to increase the burden on the urban middle class.
Possibilities, ranked
- 1Staff-level deal in October60%
The mission leaves with a staff-level agreement in the first half of October, and board approval follows in late November or December.
Watch: The IMF's end-of-mission press statement
- 2Delay pending prior actions30%
The deal is made conditional on completing legal changes or energy tariff steps and slips by weeks.
Watch: IMF-linked legislative package submitted to parliament
- 3Talks stall10%
No agreement is reached on sugar and energy, and the mission leaves without a deal.
Watch: Tone of statements from the finance ministry and the IMF
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Potential new financing▲ $1.2 billion
- Received to date▲ $4.8 billion
- Required legal changes▼ ~174