The scheduled disbursement of the sixth tranche of funds under Pakistan's stand-by agreement (SBA) with the IMF is still pending because of the repeated failure of the government to implement structural economic reforms mandated by the Fund. The disbursement was first delayed until September 2010, subject to the fifth review of the agreement, which was to have been conducted in August. The review was rescheduled for early December, but again did not take place. In late December the IMF approved a nine-month extension of the SBA until the end of September 2011. The Fund has said that it will continue negotiations on the fifth review, but in January it expressed displeasure with the authorities' decision to reverse a fuel-price increase and, more importantly, to delay further the imposition of a revised general sales tax (RGST).

The latter measure is a condition of continued support under the SBA, but has been postponed repeatedly since mid-2010. It is highly unlikely that the PPP will be able to garner the broad-based political support necessary for economic reforms such as the RGST. Indeed, in early March MQM and PML (N) leaders voiced explicitly their intention to oppose the government if it pushed ahead with measures such as tax reform. Its decision in early January to reverse the fuel-price rise signalled that it would be willing to sacrifice its commitment to reform if necessary in order to prop up the government. The reforms therefore appear unlikely to be passed in the next six months, raising the question of how far the IMF's patience with Pakistan will extend. In recognition of the political impasse, the government will discuss with the Fund the possibility of implementing the needed reforms via executive order-although this too would provoke a backlash from the MQM and PML (N).