FinMin pushes reform, financing agenda at IMF–World Bank meetings Clutch Fire

The government is poised to sign a preliminary deal on a review of its loan programme with the International Monetary Fund this week, Finance Minister Muhammad Aurangzeb said, a key step required to pave the way for another $1.24 billion payout from the lender.

An IMF mission left Pakistan last week without signing a so-called staff level agreement on the second review of the Washington-based lender’s $7 billion Extended Fund Facility and the first one on its $1.4 billion Resilience and Sustainability Facility agreed in 2024 to shore up the economy after a severe financial crisis.

“The mission was on the ground for a couple of weeks, we had very constructive dialogue with them around the quantitative benchmarks, the structural benchmarks, and we’ve been having some follow-up discussions,” Aurangzeb told Reuters during an interview on the sidelines of the IMF World Bank annual meeting.

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“During the course of this week, we’re hoping that we can get the SLA done.”

Countries under IMF lending programmes need to pass regular reviews, which – once signed off by the Fund’s executive board, trigger a payment of the next tranche of IMF funding.

The IMF programme agreed in September 2024 helped shore up then-cash-strapped Pakistan’s $370 billion economy that was engulfed in an economic crisis with inflation spiralling to record highs, a rapidly depreciating currency and a bulging external deficit.

Aurangzeb expected the government would launch a green Panda bond – the first one denominated in Chinese yuan for Pakistan – before year-end and return to international markets next year with a bond sale of at least $1 billion, though details were still to be decided.

“Euro, dollar, Sukuk, Islam Sukuk – we’re keeping our options open,” he said.

Meanwhile the privatisation push – part of a long-delayed sale of state assets under an economic reform and fiscal stabilisation agenda – was expected to gain traction in the fiscal year to end-June after disappointing results last year.

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“This is something which is very important as part of our economic roadmap,” he said.

Pakistan was also making progress on the sale of three power distribution companies and national carrier Pakistan International Airlines (PIA).

“We are quite hopeful,” Aurangzeb said, citing prospects for qualified bidders for PIA after lucrative routes to Europe and Britain were opened, which made it “a very good proposition for the investors.”

The transaction would mark the country’s first major privatization in about two decades. A previous attempt collapsed last year after a single lowball offer was received, but the government has since drawn interest from five domestic business groups including Airblue, Lucky Cement, investment firm Arif Habib, and Fauji Fertilizer.

IMF projects 3.6% GDP growth

The International Monetary Fund (IMF) has projected Pakistan’s economic growth for the 2025-26 fiscal year at 3.6%, falling short of the government’s target of 4.2%. However, the global lender anticipates gradual improvement in growth over the coming years, along with a reduction in inflation and unemployment.

The IMF released its latest World Economic Outlook report, highlighting that the global economy continues to face trade and geopolitical uncertainties. The report noted that while Pakistan’s GDP growth is expected to underperform this fiscal year, broader economic stability is showing signs of improvement.

“Pakistan’s GDP growth is projected at 3.6% for 2025-26, below the government’s target of 4.2%,” the IMF said.

Last fiscal year, Pakistan’s economic growth was 2.7%. The IMF also estimated that unemployment in Pakistan will fall to 7.5% this year, down from 8% in 2024-25. Inflation is expected to remain contained at around 6%, compared with the government’s target of 7.5% and last year’s rate of 4.5%.

The report further forecast Pakistan’s current account deficit at 0.4% of GDP for 2025-26, slightly below the government’s target of 0.5% (equivalent to $2.1 billion). Last year, Pakistan posted a current account surplus of 0.5% of GDP. The IMF projected the deficit to remain limited at 1.8% in 2025 and 1.3% in 2026.

The IMF also highlighted that Pakistan remains a major oil-importing country. While economic stabilisation signs are evident, inflation continues to pose a significant challenge to the country’s economy.

“Economic stability in Pakistan is improving, but inflation remains a key challenge,” the report stated.

FinMin pushes reform at IMF–World Bank meetings

Pakistan and the International Finance Corporation have agreed to expedite the financial closure of the Reko Diq project, as Minister for Finance Muhammad Aurangzeb began a series of high-level engagements with global financial institutions in Washington.

During a meeting with Riccardo Puliti, International Finance Corporation (IFC)’s Regional Vice President for the Middle East, Central Asia, Türkiye, Afghanistan and Pakistan, Aurangzeb lauded IFC’s role in driving private investment under its 10-year Country Partnership Framework (CPF). He also welcomed IFC’s new regional office in Islamabad, terming it “a step toward deeper collaboration and increased investment momentum”.

The meetings are taking place on the sidelines of the IMF–World Bank Annual Meetings, where Aurangzeb is representing Pakistan to sustain reform momentum and attract long-term financing.

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In discussions with IMF’s Jihad Azour and the World Bank’s Axel van Trotsenburg, both sides reaffirmed commitment to “maintaining reform momentum and macroeconomic discipline” under the Extended Fund Facility (EFF) review. Aurangzeb underscored Pakistan’s climate vulnerabilities, citing floods’ impact on agriculture and GDP, and called for enhanced investment in adaptation and mitigation.

At the Commonwealth Finance Ministers’ Meeting, Aurangzeb urged “concrete actions for a resilient and prosperous Commonwealth,” backing initiatives like the Infrastructure and Financial Resilience Hub and the Technical Assistance Fund. He emphasised the need to operationalize climate financing tools, including the Loss and Damage Fund.

In a separate meeting with US Assistant Treasury Secretary Robert Kaproth and Counselor Jonathan Greenstein, Aurangzeb briefed them on Pakistan’s stabilising indicators under the IMF programme and discussed new virtual assets legislation. He invited US investors to explore opportunities in oil and gas, minerals, agriculture, and IT.

Addressing the US-Pakistan Business Council, Aurangzeb said private sector growth was key to sustaining economic momentum, assuring business leaders that “all genuine concerns will be addressed”.

He also met Islamic Development Bank (IsDB) President Dr Muhammad Sulaiman Al-Jasser, thanking the Bank for its partnership and financing for two M-6 Motorway sections. Talks included cooperation on polio eradication, oil financing, and a new Country Engagement Framework (CEF).

In a meeting with Citi Bank representatives, Aurangzeb highlighted Pakistan’s “stabilising macroeconomic outlook, backed by reforms and improving credit ratings,” and termed the country an emerging “regional hub for digital innovation and financial services.”

The day concluded with interviews with Reuters and AP, followed by a dinner hosted by Ambassador Rizwan Saeed Sheikh, attended by US officials and community leaders.

Aurangzeb praised overseas Pakistanis for their contributions and reaffirmed the government’s resolve to “actively engage them in national development”.

FinMin is in Washington for a 6-day trip to attend the weeklong plenary meetings of the International Monetary Fund (IMF) and the World Bank (WB) — gatherings that bring together global finance ministers, central bankers and development leaders.

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His visit comes at a critical juncture for Pakistan’s economy, following the conclusion of talks between Islamabad and an IMF mission over the $8.4 billion lending programme, which ended without a staff-level agreement (SLA).

He will also hold bilateral meetings with finance ministers from China, the United Kingdom, Saudi Arabia, Turkiye, and Azerbaijan, as well as senior White House and US Treasury officials.

Aurangzeb is expected to deliver a keynote address at the MENAP and G24 platforms, participate in World Economic Forum (WEF) events, and attend a regional roundtable on the digital transformation of the Federal Board of Revenue (FBR).

The visit is aimed at advancing Pakistan’s reform agenda, securing international support for economic stabilisation and investment, and reinforcing engagement with multilateral lenders and private investors.