Pakistan, IMF begin talks on 9th economic review

Pakistan was granted a bailout of $6 billion in 2019 and $1 billion in 2022 under the Extended Fund Facility (EFF) of the International Monetary Fund.

This year, Pakistan has been dealing with the devastating effects of floods, which have wiped out farmland and infrastructure, killed over 1,700 people, and exacerbated an already severe economic crisis marked by unprecedented inflation and rapidly decreasing foreign exchange reserves.

The IMF delegation, led by Nathan Porter, met with Finance Minister Ishaq Dar to discuss Pakistan’s current economic situation.

The negotiations were attended to by Aisha Ghaus Pasha, Minister of State for Finance, as well as Special Assistants to the Prime Minister Tariq Pasha and Tariq Bajwa.

The 9th economic review’s format and details were discussed.

Officials say that officials from the IMF are insisting on strict financial discipline because the IMF has identified Pakistan’s financial losses and damages.

However, officials from the finance ministry say that the global lender did not oppose providing aid to the underprivileged and is willing to continue providing assistance through the Benazir Income Support Program (BISP).

Pakistan has stated its intention to remain a participant in the IMF loan program and its determination to complete it.

Pakistani officials promised the IMF that all demands would be met, but the government said that difficult decisions would be made gradually.

Dar briefed the mission on the government’s fiscal and economic reforms and measures to improve the economy in a variety of areas, including bridging the fiscal gap, maintaining the stability of the exchange rate, and the energy sector.

He informed the audience that the power sector is undergoing reforms, and a high-level committee has been established to devise strategies to combat the threat posed by circular debt in the gas sector.

In addition, the Finance Minister expressed gratitude to the IMF managing director for the continuation of the talks and stated that the government was committed to completing the ongoing program and that, in his capacity as finance minister, he had previously successfully completed the IMF program.

He also said that he would fully support the mission and said that they would work together to come to an agreement to finish the ninth review under the Extended Fund Facility (EFF).

The IMF Mission Chief, Nathan Porter, expressed his optimism that Pakistan would maintain its progress on reforms in various sectors and successfully complete the IMF Program within the allotted time frame. He also expressed confidence that the government will meet the IMF’s requirements for the completion of the ninth review.

He went on to say that Pakistan and the IMF will collaborate on fiscal reforms.

The governor of the State Bank of Pakistan (SBP), Jameel Ahmad, also met with the IMF delegation to talk about Pakistan’s economic situation.

He briefed the delegation on market-based exchange rate policy and discussed the recent 100 basis point increase in the base interest rate.