The newly approved IMF Programme in the form of a 37-month Extended Fund Facility can be considered as perhaps the toughest ever for Pakistan.

This conclusion is reached after a careful examination below of the 7 Quantitative Performance Criteria, 2 Continuous Performance Criteria and 7 Indicative Targets in the Program. The focus in this article will be on these criteria and targets.

As expected, the first quantitative performance criterion is a floor on the net international reserves with the SBP. These are expected to be above $12 billion at the end of December 2024. Fortunately, the actual reserves have crossed the $11 billion mark by mid-October.

However, the IMF expects that the pressure on reserves will peak in the second half of 2024-25. As such, the floor for end June 2025 has been brought down to $8.6 billion. Clearly, the performance of the SBP in successfully keeping reserves above the floor level will be tested strongly from March to June 2025.

The second extremely important inclusion in the quantitative performance criteria relates to the size of the primary surplus in public finances. It is expected to reach a peak of Rs2877 billion by the end of December 2024. This is equivalent to 2.3% of the projected nominal GDP in 2024-25. If attained, this will be perhaps the largest-ever primary surplus. Risks are very high as this will hinge on attainment of FBR revenue target in the first six months. There is already a significant shortfall in these revenues.

The size of the primary surplus is expected to come down somewhat to Rs2435 billion by the end of 2024-25. However, it will still be close to 2% of the GDP. Both Federal and Provincial governments will have to exercise strong economy........

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