Pakistan submits 10-year debt relief framework to IMF

Pakistan has submitted a detailed Debt Reduction Framework to the IMF, under which the target is to reduce the debt to GDP ratio from the current level to 55.7 percent by 2034. The phased targets are as follows:

• 2027: 67.4 percent
• 2028: 64.7 percent
• 2029: 61.6 percent
• 2033: 56.8 percent
• 2034: 55.7 percent

The IMF has agreed to this framework but has also made it clear that these targets will not be achieved without reforms. Widening the tax net in the FBR, reducing losses of state-owned enterprises, bringing the circular debt of the energy sector under control and keeping tight control on expenditure are all mandatory conditions.

The real challenge is that Pakistan has set such targets in the past too, but implementation has always lagged behind. Tax reforms are politically difficult, the energy sector crisis is deep and the privatization process of government enterprises is slow. The IMF will now be watching to see how these promises materialize in the upcoming budget.