Pakistan, IMF begin talks on 9th economic review
Pakistan and the International Monetary Fund have begun talks online on a ninth review of a $7 billion loan program.
Under the IMF’s Extended Fund Facility (EFF), Pakistan secured a $6 billion bailout in 2019 that was topped up with another $1 billion in 2022.
Pakistan has been grappling with the devastating impact of floods this year, which has claimed over 1,700 lives, ravaged farmlands and infrastructure, and further exacerbated the already existing economic crisis characterized by unprecedented inflation levels and rapidly declining foreign exchange reserves.
The IMF delegation, headed by Nathan Porter, held a meeting with Finance Minister Ishaq Dar, where the current economic situation of Pakistan was discussed.
Minister of State for Finance Aisha Ghaus Pasha, along with Special Assistants to the Prime Minister, Tariq Pasha and Tariq Bajwa, participated in the negotiations.
The schedule and features of the 9th economic review were discussed.
IMF has demanded strict adherence to financial discipline
The IMF has identified the financial losses and damages faced by Pakistan and is insistent on strict adherence to financial discipline, according to officials.
However, the global lender did not oppose subsidies for the poor, and they are willing to continue relief under the Benazir Income Support Program (BISP), according to finance ministry officials.
Pakistan determined to complete program
Pakistan has expressed its determination to complete the IMF loan program and wants to stay part of it.
IMF was assured by Pakistani officials that all demands will be implemented but the government said that difficult decisions will be implemented gradually.
Dar briefed the mission on the fiscal and economic reforms and measures being taken by the government in different sectors including bridging the fiscal gap, exchange rate stability and in energy sector for the betterment of the economy.
He apprised that reforms are being introduced in power sector and a high level committee has been formed for devising modalities to offset the menace of circular debt in gas sector.
Finance Minister also extended gratitude to the IMF managing director on continuation of talks and shared that as finance minister he had successfully completed the IMF program in the past and that the government was committed to complete the ongoing program.
He further extended all his support to the mission and committed to work together for reaching an agreement to complete the ninth review under Extended Fund Facility (EFF).
Nathan Porter, IMF Mission Chief expressed his confidence that the government will meet the IMF requirements for the completion of the ninth review and hoped that Pakistan would continue towards its progress on the reforms in various sectors and complete the IMF Program within time effectively.
He further added that IMF and Pakistan will be working together on fiscal reforms.
IMF delegation meets SBP governor
Governor of State Bank of Pakistan (SBP) Jameel Ahmad also met with the IMF delegation to discuss the economic situation of Pakistan.
He provided a briefing on the market based exchange rate policy and informed the delegation about the recent hike of 100 basis points in the base interest rate.