An International Monetary Fund mission has begun a fresh round of review talks with Pakistani authorities in Islamabad, opening a roughly two-week assessment of the country’s progress under its $7 billion Extended Fund Facility and $1.4 billion Resilience and Sustainability Facility, even as officials head into the negotiations carrying a familiar mix of missed targets and unmet commitments.

The mission, led by Iva Petrova, arrived in the capital on September 23 and is expected to remain until the first week of October. It will conduct the fourth review of the EFF and the third review of the RSF, covering the period ended June 30, 2026. Talks are structured to begin with technical discussions at the State Bank of Pakistan before moving into meetings with government economic teams and an initial sit-down with Finance Minister Muhammad Aurangzeb.

At the centre of this review is a question that has dogged nearly every recent IMF engagement with Islamabad: whether the Federal Board of Revenue can actually hit its collection targets. A key focus of the mission is the FBR’s ability to meet its first-half-year revenue collection structural benchmark under the programme, a test the tax authority has repeatedly failed to clear, having missed its annual collection targets on a recurring basis. That track record leaves Pakistani officials heading into this review needing to explain gaps rather than simply confirm compliance.

The fiscal picture at the end of June 2026 is mixed rather than uniformly troubling. Most fiscal and monetary targets were broadly on track, but the government faced a major revenue shortfall alongside a handful of policy slippages likely to draw scrutiny. Among the most notable is the government’s continued involvement in commodity operations covering wheat and sugar, an area where the IMF has explicitly required Islamabad to stay out of the market altogether. The persistence of that intervention, despite the condition, is expected to be one of the more pointed items on the mission’s agenda.

Governance reform is shaping up as another difficult conversation. The Fund is also set to assess progress on economic governance commitments that followed an earlier IMF governance and corruption diagnostic assessment, which had identified significant weaknesses in Pakistan’s anti-corruption efforts. The results so far are not encouraging: official reporting suggests only a handful of the more than three dozen targets set for the January-to-June 2026 window were actually achieved, leaving a wide gap between what was promised under the programme and what has materialised on the ground.

This review comes against a broader IMF relationship that has swung between cautious praise and pointed warning. A prior assessment tied to the release of a roughly $1.2 billion tranche had credited Pakistani authorities with “strong program implementation,” even as it approved the release alongside a formal waiver for a performance criterion that had not been met, underscoring continuing gaps in compliance. The Fund’s language at that stage struck a now-familiar balance: acknowledging progress while stressing that the economy remained exposed to significant risks and required sustained discipline to avoid backsliding. Policy priorities identified at the time spanned an unusually wide front, from maintaining macroeconomic stability to strengthening public finances, enhancing competition, raising productivity, reforming loss-making state-owned enterprises and improving the viability of the energy sector.

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There are some bright spots officials can point to heading into this round. Pakistan’s foreign exchange reserves had climbed to $14.5 billion by the end of the last fiscal year, a marked improvement from $9.4 billion twelve months earlier, though the Fund has cautioned that reserves still need to be strengthened further over the medium term with careful macroeconomic management. That build-up gives Islamabad at least some cushion to point to as evidence of stabilisation, even as the FBR’s revenue gaps and the unresolved wheat-and-sugar intervention complicate the broader compliance narrative.

The stakes extend well beyond the optics of a single review. A successful outcome would typically pave the way for the release of the next scheduled tranche under the EFF, continuing a disbursement pattern that has already delivered three separate $1 billion instalments since the programme’s approval in September 2024, plus additional climate-related financing tied to the RSF component. Pakistan’s Extended Fund Facility runs 37 months in total, while the Resilience and Sustainability Facility, approved roughly eight months later, spans 28 months, meaning both programmes still have considerable distance to run.

None of this is unfamiliar territory for Islamabad, which has turned to the IMF more than 20 times since the late 1980s, reflecting chronic balance-of-payments problems, a narrow tax base and long-standing governance weaknesses. What differs this time is less the nature of the gaps than the diminishing room for tolerance around them: reserve buffers have improved, but the revenue shortfalls, market interventions and unmet governance targets surfacing ahead of this review suggest the “sustained discipline” the IMF has been calling for remains, for now, only partially delivered.

Compiled by the Weekly PK Staff Desk.