Finance Minister Aurangzeb sees IMF staff-level agreement on $1.2bn payout this week

Pakistan is poised to sign a staff-level agreement (SLA) on a review of its loan programme with the International Monetary Fund (IMF) this week, Finance Minister Muhammad Aurangzeb said.

Last week, an IMF mission led by Iva Petrova concluded talks with Pakistani authorities on reviews of the implementation of the $7 billion Extended Fund Facility^[1] (EFF) and $1.1bn Resilience and Sustainability Facility^[2] (RSF). The programme’s performance as of the end of June this year — the period under review — has been mixed.

The mission left Pakistan without signing^[3] an SLA on the second review of the EFF — agreed in 2024 to shore up the economy after a severe financial crisis — and the first one of the RSF climate loan. However, the Fund said “significant progress^[4]” had been made towards reaching the staff deal.

“During the course of this week, we’re hoping that we can get the SLA done,“ Aurangzeb told Reuters during an interview on the sidelines of the IMF World Bank annual meeting^[5] in Washington.

“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,” the finance minister said.

Earlier today, Aurangzeb met with IMF’s Middle East and Central Asia Department Director Jihad Azour and discussed Pakistan’s reform agenda. Before leaving for the United States, the finance minister had expressed optimism that the SLA would be finalised^[6] during his visit to Washington.

The SLA is a key step required to pave the way for another $1.24 billion payout from the lender. 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.

Official sources claimed that there was no immediate need for additional tax measures to bridge shortfalls, although the tax target might have to be revised depending on the first-quarter GDP data, due in the last week of December.

At that time, the question of fresh measures or changes in rates would become due with effect from Jan 1, 2026, to cover lapses in the first half of the fiscal year in view of the biannual nature of the review.

Last month, Prime Minister Shehbaz Sharif had urged the lender^[7] to take into account the recent flood damage in its review for the country.

Pakis­tan and the IMF reached^[8] the three-year $7bn aid package deal in July last year, giving much-needed respite to the nation. The programme aimed to enable Pakistan to “cement macroeconomic stability and create conditions for stronger, more inclusive and resilient growth”.

In May this year, the IMF board approved^[9] a fresh $1bn loan to help Pakistan strengthen its economic resilience to climate vulnerabilities and natural disasters. However, the disbursement of funds is contingent upon successful completion of reviews under the EFF.

‘Quite hopeful’ on PIA privatisation

The privatisation push^[10] — part of a long-delayed^[11] 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.

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

Pakistan was also making progress on the sale of three power distribution companies^[12] and the national carrier Pakistan International Airlines^[13] (PIA).

“We are quite hopeful,” Aurangzeb said, citing prospects for qualified bidders for PIA after lucrative routes to Europe^[14] and Britain^[15] were opened, which made it “a very good proposition for the investors“.

The transaction would mark the country’s first major privatisation in about two decades.

A previous attempt collapsed last year^[16] after a single lowball offer^[17] was received, but the government has since drawn interest^[18] from five domestic business groups, including Airblue, Lucky Cement, investment firm Arif Habib and Fauji Fertiliser^[19]. Final bids are expected later this year.

Meanwhile, Aurangzeb expected the government would launch a green Panda bond^[20] — 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 $1bn, though details were still to be decided.

“Euro, dollar, Sukuk, Islam Sukuk^[21] — we’re keeping our options open,” he said.

Aurangzeb meets with IMF, World Bank delegations

Aurangzeb and IMF’s Azour held delegation-level talks in Washington, where they exchanged views on Pakistan’s reform agenda, a press release by the finance ministry said.

The ministry said Aurangzeb had a “busy first day” of his official visit^[22] to the United States, attending high-level meetings on the sidelines of the IMF and World Bank (WB) annual meetings.

“The finance minister and his delegation had a key meeting with Azour. Both sides exchanged views on Pakistan’s reform agenda and reaffirmed their shared commitment to sustaining the current momentum of reforms,” the press release said.

It added that the meeting also reviewed progress^[23] under the 2nd EFF review and acknowledged the “importance of maintaining macroeconomic discipline”.

In a separate meeting, Aurangzeb had “extensive engagement” with WB Senior Managing Director Axel van Trotsenburg, where he appreciated the Bank’s continued commitment to Pakistan’s national development agenda.

“The minister reiterated that the climate crisis remains an existential challenge for Pakistan, referencing the devastation caused by recent floods and their severe impact on the agriculture sector and GDP growth,” the statement said.

“He emphasised the need for enhanced investment in climate adaptation and mitigation measures and agreed on the importance of mobilising additional resources to manage future natural calamities,” it said.

The minister is visiting the US capital for the IMF and WB plenary meetings from October 13 to 18. The meetings bring together global finance ministers, central bankers and development leaders, offering Pakistan a crucial platform to secure the next IMF tranche, advance economic reforms, and engage international partners on growth, investment, and resilience.

Flurry of meetings to bolster partnerships with global financial institutions

Following Aurangzeb and his team’s meetings with officials of various international business stakeholders, the finance ministry said the engagements in Washington reflected the “government’s resolve to deepen economic cooperation, strengthen partnerships with international financial institutions, and accelerate Pakistan’s transition from stabilisation to sustainable, inclusive growth”.

“The visit aims to further strengthen Pakistan’s engagement with key international financial institutions, development partners, and private sector stakeholders,” the statement added.

According to the press release, Aurangzeb attended the Commonwealth Finance Ministers’ Meeting, where he underscored the importance of “prioritising concrete actions to advance a resilient and prosperous Commonwealth”.

He voiced support for the operationalisation of the Commonwealth Infrastructure and Financial Resilience Hub, as well as the Technical Assistance Fund for peer review and capacity building.

He reiterated the central importance of climate financing for developing countries like Pakistan and emphasised the urgent need to operationalise mechanisms such as the Loss and Damage Fund^[24], the statement said.

Aurangzeb was also hosted by the leadership and members of the US-Pakistan Business Council (USPBC). He briefed participants on the positive trajectory of Pakistan’s macroeconomic indicators, calling private sector growth “vital to sustaining economic momentum”.

According to the press release, he reaffirmed the government’s commitment to addressing business challenges and providing maximum relief, highlighting the recent trade deal with the US authorities and “expressing optimism for enhanced government-to-government and business-to-business engagements in key sectors, including mining, agriculture, information technology, and pharmaceuticals”.

Aurangzeb also met with Robert Kaproth, US assistant treasury secretary for international finance, and Counsellor Jonathan Greenstein. During the discussion, he highlighted the “strong economic fundamentals” of Pakistan, underpinned by the ongoing IMF programme.

He welcomed the successful conclusion of negotiations with the US administration leading to a tariff deal^[25] and apprised the officials about Pakistan’s recent legislation to regulate virtual assets. He further invited US companies to explore investment^[26] opportunities in Pakistan’s oil and gas, mineral, agriculture, and information technology sectors, the release said.

Aurangzeb also met with representatives of Citi Bank, where he “acknowledged Citi’s longstanding partnership with Pakistan and appreciated its continued engagement”.

“The minister shared an overview of Pakistan’s stabilising macroeconomic outlook, driven by ongoing structural reforms and validated by international credit rating agencies. He also highlighted Pakistan’s growing role as a regional hub for digital innovation and financial services, assuring that the government would give due consideration to Citi’s proposals,” the statement said.

The statement added that the minister also interacted with US and international media, including interviews with the Associated Press and Reuters, and attended a dinner in honour of the Pakistan delegation by Pakistan’s Ambassador to the US Rizwan Saeed Sheikh.