Islamabad: The International Monetary Fund (IMF) team left Pakistan without signing the much-anticipated Staff-Level Agreement (SLA) with Islamabad. They said they were worried about budget mismanagement, unclear spending, and escalating defense costs.
According to CNN-News18, the IMF’s return to Washington without finalizing the SLA means that the next $1 billion loan tranche would be delayed. Pakistan’s appeal for “grace time” to meet its obligations was also turned down.
The IMF pointed out that Islamabad has not met important reform goals, like as collecting taxes and making the budget more efficient. Pakistan blamed these failures on recent floods and the May 2025 confrontation with India.
People were even more worried when the IMF saw an extra $2–2.5 billion in defense spending over six months, along with unclear financial practices like setting up specific funds for security activities.
The lack of revenue makes things worse.
Bilal Kayani, the Minister of State for Finance, said that the Federal Board of Revenue (FBR) only received PKR 11.74 trillion in fiscal year 2025. This was less than the objective of PKR 12.9 trillion and the agreed-upon tax-to-GDP ratio of 10.5%. The ratio did become a little better, going up by 1.4% from the year before, but it still didn’t meet IMF expectations.
The IMF thought that Pakistan’s development wasn’t enough to accomplish important reform goals, which made them question the country’s fiscal discipline and long-term financial stability.
Pakistan and the IMF are still talking, but because there is no signed agreement, Islamabad can’t get IMF money or find alternative ways to get money from other global institutions. This puts more and more strain on the country’s economy.