ISLAMABAD: The ongoing talks between an International Monetary Fund (IMF) staff mission and authorities in Islamabad had to be converted to virtual mode on Monday due to the regional situation following the attack on Iran by the United States and Israel.

The IMF mission, led by Iva Petrova, had to immediately relocate to Istanbul following an advisory issued by the money lending agency’s headquarters, disrupting a series of sectoral meetings planned for the day.

The remaining schedule of meetings, however, will remain intact and will progress through video link between Islamabad and Istanbul.

“An IMF mission led by Iva Petrova has started discussions with the authorities in Karachi and Islamabad on the third review of Pakistan’s Extended Fund Facility (EFF) arrangement and the second review of the Resilience and Sustainability Facility (RSF). Discussions will continue to be held virtually,” the Fund said in a statement.

Earlier in the day, the two sides had a kick-off meeting presided over by Finance Minister Muhammad Aurangzeb. The two sides broadly touched upon the emerging regional security situation but were equally uncertain about how the crisis would play out and for how long.

The two sides said they would closely monitor the evolving situation and discuss contingency measures as the engagements progressed.

The Fund’s mission began discussions with the State Bank of Pakistan and the business community in Karachi on February 25.

The formal kickoff meeting took place on Monday, which will be followed by further technical engagements with relevant ministries and entities until this weekend. Meetings will then progress to policy-level talks early next week, with a final wrap-up meeting with the finance minister planned for March 11.

The discussions on Monday revolved around third review of the $7bn Extended Financing Facility (EFF) and 2nd review of $1.1bn Resilience & Sustainability Facility (RSF). Finance Minister Aurangzeb said last week that Pakistan was well-positioned for a successful review of its loan programme.

The review talks, ending March 11, are of greater significance as both sides have to review the performance of the progammes for the half-year ending on December 31, 2025 as well as forward-looking preparations, including budget proposals based on performance this year, while also setting broad contours of the upcoming budget.

This would involve provincial reviews for now and the future, particularly those relating to provincial finances, including agriculture income tax and governance-related challenges and an action plan to address those weaknesses resulting in losses worth trillions of rupees.

In this regard, procurement and accountability agencies would be under added scrutiny, including their independence, institutional capacities, processes and performances.

The programme’s performance as of the end of December 2025 — the period under review — has mostly been up to the mark, albeit with a substantial revenue shortfall, which authorities believe could be reduced following a recent super tax decision by the Federal Constitutional Court in the government’s favour.

However, the overall tax-to-GDP ratio remains within limits. The two sides will also review all macroeconomic indicators for the third quarter still in progress.

The power sector would also remain under added scrutiny given volatile policy making in the recent months, including those relating to the industrial sector, residential fixed charges and so on, although circular debt numbers are within the target range.

On the positive side, Pakistan has met almost all quantitative performance criteria for the period under review. However, it is lagging behind in indicative targets and structural benchmarks, which could affect future programme implementation.

Given the biannual reviews of the $7bn EFF and the $1.1bn RSF, the two sides will have to agree on past performance as well as forward-looking implementation plans.

Upon the successful completion of the review, Pakistan will be eligible for the disbursement of about $1bn under the EFF and another $200m under the RSF by the end of April.

On the technical side, Pakistan will likely meet almost all seven quantitative performance indicators.

Net international reserves were likely to remain slightly lower than the $7bn benchmark for September 2025 and below $6bn for December 2025 against the $6.5 bn benchmark.

The central bank’s net domestic assets are estimated at around Rs12.5-13.5 trillion versus the ceiling target of Rs14.9-15.1tr for Sep and Dec 2025.

According to the monthly review of price indices released by the Pakistan Bureau of Statistics (PBS), the National Consumer Price Index for February 2026 increased by 0.27 per cent over January 2026 and was up by 6.98pc from the corresponding month of 2025.

Analysts at Topline Securities noted that this increase is in line with their estimate of 6.75-7.25pc.

Arif Habib Limited observed that this is the highest increase since October 2024.

The report showed that the Urban Consumer Price Index for February 2026 increased by 0.27pc over January 2026 and by 6.79pc from the corresponding month last year

The main contributors that increased from the previous month in terms of food were tomatoes (23.05pc), fresh fruits (11.48pc), pulse mash (8.19pc), beverages (1.65pc), meat (1.45pc), pulse moong (1.25pc), mustard oil (1.20pc), dry fruits (0.78pc), wheat products (0.68pc), readymade food (0.44pc) and pulse gram (0.34pc).

The main contributors that increased from the previous month in terms of non-food were electricity charges (10.03pc), cleaning and laundering (2.09pc), tailoring (2.04pc), solid fuel (1.71pc), and doctor (MBBS) clinic fee (1.05pc).

The main contributors that fell from the previous month were eggs (22.39pc), chicken (19.99pc), potatoes (15.89pc), pulse masoor (4.03pc), onions (3.90pc), fresh vegetables (3.88pc), besan (1.67pc), vegetable ghee (0.99pc), cooking oil (0.94pc), gur (0.39pc), sugar (0.35pc), gram whole (0.17pc), transport services (10.38pc) and stationery (0.03pc).

The Rural Consumer Price Index for February 2026 increased by 0.28pc over January 2026, and increased by 7.27pc over the corresponding month of the last year.

The Wholesale Price Index for February 2026 increased by 0.66pc over January 2026 and increased by 1.05pc over the corresponding month of the last year.

The sensitive price indicator (SPI), which tracks changes in prices of essential goods and services, showed modest shifts across different income quintiles in February 2026.

Compared to January 2026, all quintiles recorded slight declines, reflecting a marginal easing in short-term price pressures. Quintile 1 fell 0.15pc, quintile 2 edged down 0.02pc, quintile 3 declined 0.20pc, quintile 4 dropped 0.30pc, and quintile 5 decreased 0.27pc, while the combined index fell 0.12pc.

On a year-on-year basis, the SPI remained higher across all quintiles. The largest increase was seen in quintile 2 at 5.88pc, followed by quintile 3 at 5.02pc, quintile 1 at 4.80pc, quintile 4 at 4.35pc, and quintile 5 at 3.50pc. Overall, the combined index rose 4.60pc compared to February 2025, highlighting sustained inflationary pressures despite slight monthly easing.

Weekly changes in February 2026 showed short-term volatility. Quintile 1 recorded a 0.13pc rise in the first week, fell 0.62pc in the second week, climbed 1.11pc in the third week, and dropped 0.71pc in the final week. The combined index mirrored these fluctuations with weekly movements of 0.09pc, -0.59pc, 1.16pc, and -0.54pc, indicating that while prices experienced minor weekly swings, the overall trend remained upward on an annual basis.

Gold prices rose on Monday after the US and Israel launched major strikes on Iran that assassinated Supreme Leader Ayatollah Ali Khamenei, escalating geopolitical tensions and deepening global economic uncertainty.

Spot gold was up 1.88 per cent at $5,376.44 an ounce, as of 06:32 GMT, after hitting its highest point in more than four weeks.

Earlier in the session, bullion prices had climbed as much as 2pc.

US gold futures rose 2.7pc to $5,389.20 per ounce.

Israel launched a new wave of strikes on Tehran on Sunday, and Iran responded with more missile barrages, a day after the assassination of Khamenei pitched the Middle East and the global economy into deepening uncertainty.

“Unlike previous escalations in this conflict, there is fairly strong incentive here for both sides to continue to escalate potentially — and that runs the risk of leading to a pretty chaotic, uncertain, and, therefore, volatile environment for more than just a few days … the dynamic for gold is pretty positive,” said Kyle Rodda, senior financial market analyst at Capital.com.

However, the US dollar index rose 0.27pc, making gold more expensive for overseas buyers and capping the metal’s gains.

Bullion, a traditional safe-haven asset, has hit successive record highs this year due to heightened global political and economic uncertainty.

The latest rally builds on a 64pc surge in 2025, driven by strong central bank buying, robust inflows into exchange-traded funds, and expectations of US monetary policy easing.

“Gold is perhaps the finest barometer to reflect global uncertainty and, to mix metaphors, the mercury is rising. We should expect gold to be repriced higher to fresh records as we enter a whole new era of geopolitical uncertainty,” said independent analyst Ross Norman.

Meanwhile, data on Friday showed that US producer prices rose more than expected in January, suggesting inflation could pick up in the coming months.

Investors will also watch a series of US labor market readings this week, including the ADP employment report, weekly jobless claims, and the non-farm payrolls report.

Spot silver added 1.3pc to $95 per ounce, after registering a monthly gain in February.

Spot platinum was up 0.8pc at $2,383.50 per ounce, while palladium advanced 2.3pc to $1,826.59.