IMF Teams Arrives in Islamabad Ahead of Crucial Talks

The International Monetary Fund (IMF) team has reached Islamabad for completing the ninth review of the Extended Fund Facility (EFF) program.

Sources informed ProPakistani that the IMF team, under the supervision of the Mission Chief to Pakistan Nathan Porter, has reached Islamabad and both sides will officially start negotiations in order to complete the ninth review of the EFF program.

There will be technical negotiations from Tuesday to Friday as both sides will share information with each other, sources added.

Sources further added that there would be policy-level negotiations from next Monday in which the Finance Minister, Secretary Finance, FBR Chairman, and State Bank of Pakistan Governor will participate.

Last week, IMF Resident Representative in Pakistan Esther Pérez Ruiz told ProPakistani that at the request of the authorities, an in-person Fund mission is scheduled to visit Islamabad from January 31st – February 9th to continue the discussions under the ninth EFF review.

IMF demands

“The mission will focus on policies to restore domestic and external sustainability, including to strengthen the fiscal position with durable and high-quality measures while supporting the vulnerable and those affected by the floods; restore the viability of the power sector and reverse the continued accumulation of circular debt; and reestablish the proper functioning of the FX market, allowing the exchange rate to clear the FX shortage,” Ruiz said in his statement.

What has been done?

One of the key IMF conditions was the implementation of a market-based exchange rate. After closing at 230.89 against the US Dollar on January 25, the Pakistani Rupee has lost over 38 rupees in the last three trading sessions. A mini-budget is also in the works to take additional taxation measures demanded by the IMF.

Why the IMF program is critical

As of January 20, the foreign currency reserves held by the State Bank of Pakistan were recorded at $3.678 billion, which are likely even lower now. Pakistan has also failed to secure financing from friendly countries without IMF being on board. The revival of the loan program is critical for Pakistan as the country has almost run out of forex reserves with no other source of financing.