The Finance Ministry says Pakistan’s IMF programme involves multiple federal and provincial institutions, not the Finance Division alone.
ISLAMABAD: The Ministry of Finance (MoF) has rejected a media report concerning Pakistan’s engagement with the International Monetary Fund (IMF), stressing that the IMF programme is a whole-of-government initiative rather than a programme controlled solely by the Finance Division.
In a statement issued in response to a report published by The Express Tribune on September 22, titled “Iqbal seeks role in IMF talks”, the ministry said several assertions and interpretations concerning its role, Pakistan’s engagement with the IMF and the government’s economic stabilisation programme were misleading and did not accurately reflect the institutional process.
“The IMF programme is a whole-of-government programme, not a Finance Division programme,” the ministry said.
It explained that Pakistan’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF) programmes cover reforms and commitments falling within the mandates of multiple federal and provincial institutions.
These include the Finance Division, Planning Commission and Ministry of Planning, Ministry of Energy, provincial governments, Federal Board of Revenue (FBR), State Bank of Pakistan (SBP) and other relevant stakeholders.
According to the ministry, concerned ministries and institutions participate in and lead technical discussions, including the setting of benchmarks relating to their respective areas of responsibility. The IMF’s latest published programme documents likewise cover reforms spanning public finances, energy-sector viability, social protection, structural reforms and climate resilience.
The MoF also rejected the characterisation that it has maintained “tight control” over programme design and negotiations, saying this does not accurately reflect the institutional arrangements underpinning Pakistan’s IMF programme.
IMF programme covers wider structural reforms
The ministry emphasised that the IMF programme extends beyond fiscal targets and macroeconomic indicators. It also encompasses growth-enhancing structural reforms, social protection, governance, energy-sector efficiency, climate resilience and efforts to reduce economic distortions.
The IMF’s third-review documents describe policy priorities that include strengthening public finances, improving energy-sector viability, enhancing competition and productivity, bolstering social protection and advancing climate-related reforms.
On the Petroleum Development Levy (PDL), the ministry said describing the levy as the “central point” of the IMF programme was misleading.
It said the programme’s fiscal strategy was considerably broader, encompassing FBR revenue mobilisation, expansion of the tax base, provincial taxation and expenditure rationalisation.
For FY2026-27, the programme places particular emphasis on additional revenue mobilisation and strengthening FBR performance, while the PDL remains one of several revenue instruments available to the government.
The ministry clarified that the IMF programme does not prescribe a single permanent headline PDL rate. However, its published documents contain measures concerning petroleum pricing and levies, including the alignment of domestic fuel prices with international prices through regular adjustments. The IMF’s 2026 programme documents record measures relating to petroleum pricing and note the importance of petroleum-related revenue to Pakistan’s fiscal position.
The RSF also includes a reform measure for introducing a supplementary carbon levy through the PDL framework.
Consequently, the MoF said petroleum pricing policy forms part of the agreed programme framework and is not a fiscal strategy developed solely by the Finance Division. Recent reporting also quoted the ministry as saying that the PDL is one of several revenue instruments under the programme.
Multiple factors behind inflation and growth
The ministry also rejected attempts to directly link the PDL with inflation, unemployment, poverty and weak economic growth, describing such an approach as analytically incorrect because it attributes broad macroeconomic outcomes to a single fiscal instrument.
It said Pakistan’s inflation and growth performance had been influenced by multiple factors, including the prevailing geopolitical situation, domestic and international commodity prices, exchange-rate movements, monetary conditions, fiscal imbalances, external financing constraints and global shocks.
The ministry maintained that fiscal stabilisation was necessary to create the conditions for sustainable private investment and long-term economic growth.
Pakistan entered the IMF programme with limited fiscal and external buffers and substantial financing requirements, it said.
“Restoring fiscal sustainability, rebuilding reserves and reducing refinancing risks are necessary conditions for durable private investment and growth,” the ministry stated.
The IMF’s third-review assessment similarly identified macroeconomic stability, rebuilding buffers and structural reforms as key elements of Pakistan’s programme, while noting risks from external and geopolitical developments.
The ministry added that the IMF’s third-review documents recorded that fiscal consolidation had helped reduce macroeconomic imbalances and demand pressures, supported disinflation and contributed to external-sector stabilisation through reserve accumulation and a recovery in overall growth.
Social protection remains part of programme
The Finance Division further rejected the suggestion that fiscal consolidation had been pursued without adequate social safeguards.
It said the programme included explicit floors and commitments for social protection, including targeted cash-transfer spending under the Benazir Income Support Programme (BISP) and inflation adjustments to unconditional cash-transfer benefits.
The recently introduced targeted fuel subsidy programme was also cited as an example of support aimed at protecting vulnerable households.
According to the ministry, the subsidy was designed as targeted, temporary and fiscally sustainable assistance, rather than a broad-based subsidy that could create significant long-term fiscal liabilities.
On public debt, the ministry said sovereign debt was contingent on fiscal imbalances and maintained that debt growth during the last financial year had been limited to its lowest level in two decades.
Agriculture taxation falls under provincial jurisdiction
The Finance Division also clarified its position on agriculture-related commitments, saying these were not exclusively its responsibility.
Agricultural income taxation is constitutionally and administratively a provincial responsibility, with implementation involving provincial governments, it said.
“Any assessment of these reforms should therefore distinguish between programme coordination by Finance Division and constitutional and administrative responsibilities of the relevant governments and institutions,” the ministry added.
The MoF stressed that a clear distinction should be maintained between the Finance Division’s responsibility for overall programme coordination and the agreement of benchmarks with the IMF, and the subsequent policymaking, legislative and implementation responsibilities of the respective federal ministries and provincial governments.
MoF stresses whole-of-government approach
The ministry concluded that the appropriate policy debate was not about choosing between stabilisation and growth, but about how Pakistan could transition from stabilisation towards sustainable growth while avoiding the fiscal and external imbalances that had necessitated repeated IMF stabilisation programmes in the past.
Pakistan’s current IMF arrangements comprise the 37-month EFF and 28-month RSF, with the IMF Executive Board completing the third EFF review and second RSF review in May 2026.
The Finance Ministry’s latest clarification therefore centres on institutional responsibility, arguing that implementation of the IMF programme involves multiple federal and provincial bodies rather than the Finance Division acting alone.