Pakistan and the International Monetary Fund (IMF) continued their policy-level discussions on Tuesday as part of the second review of the ongoing programme, with the federal government briefing the Fund on updated economic indicators and proposing a revised growth target of below 4.2 percent, reported 24NewsHD TV channel.
According to official sources, the draft Memorandum of Economic and Financial Policies (MEFP) has entered its final stages.
The government informed the IMF that due to recent flood damage, Pakistan’s economic growth is expected to remain limited to around 3.5 percent, while inflation could exceed 8 percent, slightly above the official target of 7.5 percent.
The government projects remittances to reach $42 billion, surpassing the earlier $39.4 billion target, while the IMF’s estimate remains lower at $35.7 billion.
The country’s foreign exchange reserves are expected to climb to $14.5 billion, and the current account deficit is likely to stay at around $500 million, compared with an earlier estimate of $2.1 billion.
The IMF, however, forecasts a higher deficit of $1.49 billion and expects exports to remain below $33 billion.
Sources said that Finance Minister Muhammad Aurangzeb is expected to hold final talks with the IMF mission in the coming days.
During yesterday's talks, the IMF had barred the federal government from funding development schemes in flood-hit regions, directing that provincial governments should finance their own rehabilitation projects and ensure that fiscal surpluses remain intact.
The policy-level discussions, which began on Monday, also covered the new five-year tariff policy, the Reko Diq copper and gold mining project, and the economic implications of the recent floods.
During separate meetings with the Ministry of Energy, the IMF mission discussed power sector reforms, including line losses, bill recovery, and the timeline for privatising distribution companies (DISCOs).
Officials briefed the IMF that the total cost of the Reko Diq Copper and Gold Project has risen from $4.3 billion to $7.72 billion, with the first phase expected to produce 200,000 metric tonnes of copper annually by 2029.
The second phase, scheduled for 2034, will add $3.3 billion in investment to expand production to 90 million tonnes per year. The project is jointly owned by Canada’s Barrick Gold (50%) and the Government of Pakistan and Balochistan (50%).
Officials said the project could generate a net cash flow of $70 billion over 37 years, calling it a “game-changer” for Pakistan’s economy.
On trade policy, officials informed the IMF that the new National Tariff Policy 2025–30 aims to gradually reduce import duties, promoting exports and investment.
The plan seeks to lower Pakistan’s average tariff rate from 20.19 percent to 9.70 percent over five years and eliminate regulatory and additional customs duties within four to five years.
The policy could make imported goods, including automobiles, cheaper, potentially widening the trade deficit in the short term but strengthening long-term economic stability.
Reporter: Waqas Azeem