Pakistan to seek flexibility in IMF programme for evolving contingencies amid war on Iran

ISLAMABAD: Amid continuous surge in global market, Pakistan on Thursday said it would seek flexibility in International Monetary Fund (IMF) programme to create room for evolving contingencies amid the US-Israeli war on Iran and pass on the burden of petroleum prices to its consumers.

This was announced by the Ministry of Finance after a meeting between Finance Minister Muhammad Aurangzeb and the US Charge d’Affaires Natalie Baker ahead of upcoming spring meetings of the IMF and the World Bank later this month.

An official statement by the ministry said both sides discussed Pakistan’s ongoing engagement with international financial institutions and development partners, including efforts to maintain reform momentum under the IMF programme.

“The finance minister reiterated Pakistan’s commitment to fiscal discipline while seeking flexibility in light of evolving global and regional challenges,” the statement said.

The minister also briefed the US diplomat of ongoing efforts to manage energy sector challenges, including procurement, pricing mechanisms, and targeted subsidies.

“While supply arrangements were being maintained, the government was working on improving price transmission and ensuring that subsidies are better targeted towards vulnerable segments such as small farmers and public transport users,” the minister was quoted as saying.

Pakistan has frozen the major petroleum prices — petrol and diesel — for three weeks now after initial increase in the first week of the conflict at an estimated expense of Rs129bn so far.

While global diesel and petrol prices have surged by over 220pc and 80pc since the war broke out, diesel has jumped more than $46 per barrel – over 15pc on Thursday alone – the highest in history.

The federal government has now persuaded the provinces to take responsibility of subsidising bikers, farmers and public transport for targeted support and pass on the actual imported cost to retail prices.

In its statement, the ministry said discussions also touched upon developments in the energy sector and broader economic outlook, with an emphasis on ensuring stability while protecting vulnerable segments of society.

The minister underscored the broader implications of rising global oil prices on Pakistan’s import bill, inflation outlook, and overall macroeconomic stability.

Meanwhile, Baker reaffirmed US support for Pakistan’s economic reform agenda and appreciated the government’s efforts to stabilise the economy under challenging circumstances. She emphasised continued US interest in promoting investment in key sectors such as energy, mining, technology and logistics, the statement said.

Both sides also discussed opportunities for enhancing investment flows, including participation in upcoming international forums. The potential for collaboration in infrastructure development, digital connectivity, and regional trade was also explored, it said.

The finance minister acknowledged the constructive role of US partners and emphasised Pakistan’s openness to facilitating investment and improving the business environment. He reiterated the government’s focus on structural reforms, export-led growth, and strengthening institutional frameworks, it said.

During the meeting, both sides held a comprehensive exchange on Pakistan-US bilateral relations, ongoing economic developments, and avenues for enhanced cooperation in trade, investment, and energy, the ministry said.

Baker also highlighted a recent symposium held in Washington, DC, hosted by the Pakistan Caucus in the US Congress, which brought together policymakers, diaspora representatives, and business leaders to review progress in bilateral ties and explore future opportunities. She noted the positive trajectory of engagement between the two countries, the statement said.