By Rabiya Ahsan
IMF Review Puts Pakistan’s Reform Record Under the Spotlight: What It Could Mean for Households
ISLAMABAD: Pakistan’s latest engagement with the International Monetary Fund (IMF) is once again putting the country’s economic reform programme under the spotlight, with the Fund reviewing progress on fiscal targets, energy reforms, taxation, social spending and governance.
The IMF mission began its fourth review of Pakistan’s $7 billion Extended Fund Facility (EFF) programme in September, alongside discussions under the Resilience and Sustainability Facility. If the review is completed successfully, Pakistan could receive about $1 billion under the EFF and a further $200 million through the climate-related facility. Pakistan has already received three EFF disbursements under the current programme.
But while several headline economic targets appear to be broadly on track, a number of programme commitments remain incomplete. These include health and education spending, sugar-market reforms, changes involving state-owned enterprises and several governance and taxation measures.
The issue, therefore, is not simply whether Pakistan secures the next IMF disbursement. It is also about what the remaining reforms could mean for ordinary Pakistanis.
What is the IMF reviewing?
The fourth review is examining Pakistan’s performance through the end of June 2026 and progress on structural commitments under the programme.
Recent reporting indicates that Pakistan has made progress on several fiscal and monetary indicators. At the same time, the government has acknowledged that some programme conditions were not fully met.
The IMF programme itself places emphasis on rebuilding fiscal and external buffers, broadening the tax base, improving the energy sector, reforming state-owned enterprises and increasing spending on health, education and social protection.
That combination of progress and unfinished reforms is likely to remain central to the review.
Health and education spending falls short
One of the clearest gaps concerns spending on health and education.
The target for combined health and education spending by the federal and provincial governments was Rs3.47 trillion. According to officials quoted in recent reports, actual spending was around Rs3.1 trillion, leaving a shortfall of roughly Rs370 billion.
The issue is significant because social-sector spending is an explicit part of Pakistan’s IMF programme. The Fund has repeatedly emphasised the need to rebuild spending on human capital alongside fiscal consolidation.
This is also where the IMF programme becomes more than a discussion about government accounts. Decisions about public expenditure can eventually affect schools, hospitals, development projects and social protection programmes.
Sugar reform remains unfinished
Sugar-market liberalisation is another outstanding issue.
The government was expected to adopt a national policy aimed at liberalising the sugar market. Finance Secretary Imdadullah Bosal recently told a parliamentary committee that three provinces had agreed to the proposed policy, while one province had reservations that were still being addressed.
The IMF’s programme documents had called for a national sugar-market policy covering issues such as licensing, price controls, import and export permissions and zoning.
The reform is therefore not simply about the price of sugar. It is part of a broader effort to reduce government intervention and allow greater market-based price discovery.
State-owned enterprises remain on the reform agenda
The government also faces unfinished work involving state-owned enterprises.
Recent parliamentary discussions have referred to proposed changes to laws governing public-sector entities and improvements in their governance and financial reporting.
The government has also told lawmakers that the IMF is seeking around 174 legislative amendments across a range of areas, including taxation, energy, privatisation, the Sovereign Wealth Fund, sugar policy and governance.
The scale of the proposed legislative work illustrates how the IMF programme extends beyond immediate budget measures and into structural changes in the way the state and public-sector institutions operate.
Tax collection remains another pressure point
Pakistan’s revenue position will also be closely watched.
The Federal Board of Revenue has faced challenges in meeting some of its programme targets, while discussions with the IMF include taxation of agriculture, retailers and other areas of the economy.
For ordinary citizens, tax reforms can have a direct impact on household budgets.
Changes in withholding taxes, sales taxes, income taxes or indirect taxation can increase the cost of goods and services or alter the amount individuals and businesses pay to the government.
This is why the implementation of IMF-related tax measures often attracts as much public attention as the headline size of the loan itself.
What does the IMF review mean for households?
This question is at the heart of a video analysis by Rabiya Ahsan, who discusses the IMF’s fourth review and asks whether the burden of unfinished reforms could ultimately be felt by the public.
In the video, Ahsan focuses attention on the link between IMF conditions, government revenue measures and the prices ordinary Pakistanis face, particularly when adjustments involve fuel and electricity.
Her central concern is that while meeting IMF conditions may help strengthen Pakistan’s financial position, the method used to achieve those targets matters for households.
That concern comes at a time when energy reforms remain a major component of Pakistan’s IMF programme. The Fund has called for regular tariff adjustments, while also stressing the need for reforms that improve the financial viability of the energy sector and protect vulnerable consumers.
Watch Rabiya Ahsan’s full analysis:
IMF 4th Review Delegation Reaches Pakistan: Reforms Incomplete, Will Public Face More Inflation? — YouTube
Energy prices remain a key concern
Energy is particularly important because changes in electricity, gas and petroleum prices can have effects far beyond the monthly utility bill.
Higher energy costs can raise operating expenses for factories, shops, transport companies and agricultural businesses. Those costs can then feed into the prices consumers ultimately pay.
The IMF’s programme includes regular energy-tariff adjustments and measures intended to improve the financial position of the energy sector. The Fund has also emphasised protecting vulnerable consumers from large tariff increases.
For households, the important question is therefore not simply whether tariffs are adjusted, but how those adjustments are designed and distributed across different income groups.
Pakistan’s external position has also improved
There is another side to the IMF review.
Pakistan’s foreign-exchange position has strengthened significantly in recent months. State Bank of Pakistan reserves reached about $21.4 billion in September, surpassing the programme’s previously cited $21 billion reserve target for June 2027.
That development provides some additional context for the current IMF discussions.
However, reserve accumulation does not eliminate Pakistan’s longer-term external financing requirements. The country still needs to maintain sufficient foreign exchange to service external obligations and finance imports.
The IMF and other international institutions have also highlighted risks arising from regional developments, particularly the ongoing Middle East conflict, energy prices and external financing conditions.
The bigger question is what happens after the review
For Pakistan, the IMF review is only one stage of a much longer reform process.
The current EFF programme was approved in September 2024 and is scheduled to run for 37 months. Under the original programme schedule, the fourth review is associated with the September 2026 programme period, while the fifth review is scheduled for March 2027.
That distinction is important: completion of the current fourth review would support the next scheduled EFF disbursement; it is not itself the programme’s “fifth review.”
The government has already indicated that substantial legislative and structural work remains. Parliament will also have a role because many of the proposed changes require legislation rather than simply administrative decisions.
What should Pakistanis watch next?
The outcome of the IMF review will provide an important indication of how Pakistan’s economic programme is progressing, but several issues deserve attention beyond the immediate financing decision.
Among them are:
- whether the health and education spending gap is addressed;
- how the sugar-market reform is implemented;
- whether state-owned enterprise reforms move forward;
- how additional tax measures affect households and businesses;
- how electricity and gas tariff adjustments are structured;
- whether Pakistan can continue rebuilding foreign-exchange reserves; and
- whether reforms agreed under earlier reviews are actually completed.
For households, these details may ultimately matter more than the headline size of the next IMF disbursement.
A review that goes beyond the next tranche
Pakistan enters the latest IMF review with evidence of progress in several areas but also a list of unfinished commitments.
The government has maintained that overall implementation of the IMF programme remains strong, while officials have acknowledged gaps in areas including social spending, sugar-market reform and state-owned enterprise legislation.
The challenge now is to balance fiscal and external stability with the economic pressures faced by ordinary citizens.
As Rabiya Ahsan’s analysis highlights, the debate is ultimately not only about whether Pakistan meets the IMF’s conditions. It is also about who bears the cost of adjustment and whether the reforms produce lasting improvements in the economy rather than simply meeting the requirements of one review.
Prospera News | Islamabad