ISLAMABAD – The International Monetary Fund (IMF) has warned that rising regional tensions pose a serious threat to Pakistan’s economy and suggested additional taxes to address a revenue shortfall of around Rs194 billion in the first quarter of the current fiscal year.
Policy-level talks between Pakistan and the IMF under the second economic review are in the final phase, focusing on finalizing the Memorandum of Economic and Financial Policies (MEFP) draft. The finance secretary led Pakistan’s economic team in meetings with the IMF mission, while Finance Minister Muhammad Aurangzeb is also expected to join the discussions.
Reports said the IMF proposed imposing extra taxes and removing certain concessions, though no agreement has been reached yet. Pakistan’s team maintained that pending tax dispute recoveries and improved enforcement will help cover the shortfall.
The IMF was also briefed on sugar sector deregulation, auto policy, and tariff reforms, aimed at reducing state control and enhancing market-driven operations.
To ensure a successful conclusion of the $7 billion Extended Fund Facility (EFF) review, the federal government has urged provincial authorities to resolve pending IMF-related matters promptly. Provincial chief secretaries and finance secretaries have been instructed to submit progress reports within 24 hours.
The IMF cautioned that escalating regional conflict could slow down economic growth, disrupt external stability, and dampen investor confidence, while also driving up commodity prices amid global uncertainty.
