Pakistan IMF talks begin for $1.2bn

Formal negotiations between Pakistan's government and a visiting IMF staff mission begin today. The talks cover the fourth review of the $7 billion Extended Fund Facility and the third review of the Resilience Support Facility, with eligibility for about $1.2 billion in disbursements on the line. The mission, led by Iva Petrova, will stay for almost two weeks, with discussions expected to continue until the first week of October. Pakistan is currently under a 37-month IMF programme aimed at stabilising the economy through fiscal discipline and structural reforms. Upon successful completion, the country could receive about $1 billion under the EFF and another $200 million under the RSF by the end of November or early December.

Key areas of discussion in IMF talks

Pakistani officials will brief the IMF on a wide range of economic indicators and reform progress. Key discussion points include the state of foreign exchange reserves and the current account position. The government will also present updates on the Sovereign Wealth Fund and measures to reduce circular debt in the energy sector.

Talks with the Federal Board of Revenue will focus on broadening the tax base. Officials are expected to explain progress on improving tax and non-tax revenue collection by the provinces. The government must also clarify why the sugar sector has not been deregulated as planned.

Discussions will cover the primary surplus target. The Ministry of Energy is slated to brief on circular debt and broader energy sector reforms. Separately, officials from the National Accountability Bureau and the Federal Investigation Agency will outline anti-money laundering measures and efforts to prevent terrorist financing.

Clarification on PIA aircraft financing amid conflicting reports

As IMF talks proceed, a senior finance official denied reports of government involvement in aircraft purchases for Pakistan International Airlines. Adviser to the Finance Minister Khurram Schehzad clarified the government's position on Sunday, countering claims circulating on social media. Khurram Schehzad said: "The government is neither buying aircraft for a privatised PIA, nor has it announced any sovereign guarantee of taxpayer-funded loan for doing so."

PIA was privatised through an auction in December last year. The clarification follows Finance Minister Muhammad Aurangzeb's meeting with the Chairman of the US Export-Import Bank, John Jovanovich, in New York. That discussion took place on the sidelines of the United Nations General Assembly.

The finance ministry stated the two discussed the Reko Diq mining project and funding opportunities for procuring an aircraft for PIA. The minister shared PIA’s interest in Boeing’s 787 Dreamliners and sought support for a financing package. Schehzad noted that US Exim’s mandate is to support U.S. exports and jobs, providing financing to foreign purchasers of American aircraft through established structures.

Under US Exim’s framework, financing can be secured against the aircraft itself, assessed on the airline or lessee. A sovereign guarantee is not an automatic requirement. The discussions with US Exim were broad, covering potential financing for aviation, refinery upgrades, and Reko Diq as part of wider Pakistan-U.S. economic engagement. If the IMF reviews are completed successfully, Pakistan is expected to become eligible for about $1 billion under the EFF and another $200 million under the RSF, with disbursement possible by the end of November.