Critical IMF Talks Begin As Pakistan Seeks Urgent Relief

The International Monetary Fund (IMF) mission arrived in Islamabad yesterday and technical-level talks have already started for completing the 9th review of the lender’s Extended Fund Facility (EFF) program, official sources told ProPakistani.

A delegation led by IMF Mission Chief Nathan Porter met Finance Minister Ishaq Dar at the Finance Division today. The IMF resident representative Esther Perez Ruiz, Minister of State for Finance and Revenue Aisha Ghous Pasha, SAPM on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, Governor State Bank of Pakistan (SBP) Jamil Ahmed, Secretary Finance, Chairman Federal Board of Revenue (FBR), and senior officers from Finance Division attended the meeting.

Both parties discussed the current economic situation in the cash-strapped South Asian country. Additional focus was placed on the schedule and features of the 9th review, including various policies to restore domestic and external sustainability to strengthen the fiscal position with durable and high-quality measures.

Dar also extended gratitude to the Managing Director of IMF on the 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 completing the present program as well.

Finance Ministry sources said the lender identified fiscal deficits and losses incurred in the past few months and insisted on its original stance on ensuring strict adherence to financial discipline such as restoring the viability of the power sector, reversing the accumulation of circular debt, and re-establishing the proper functioning of the FX market.

During the meeting, Governor State Bank of Pakistan (SBP) Jameel Ahmed briefed the agency reps on SBP’s market-based exchange rate policy and further discussed the central bank’s recent policy rate hike of 100 basis points, including executable schemes regarding fiscal discipline and monetary policy in general.

Nathan Porter, IMF Mission Chief expressed his confidence that the government will meet the IMF requirements for the completion of the 9th review and hoped that Pakistan would continue towards its progress on the reforms in various sectors and complete the IMF Programme within time effectively. He further added that IMF and Pakistan will be working together on fiscal reforms.

Interestingly, the IMF did not oppose subsidies for the poor and seemed willing to maintain relief efforts under Benazir Income Support Program (BISP).

The IMF mission emphasized maintaining a market-based exchange rate policy which would allow the exchange rate to clear the FX shortage.

Pakistan Assures Full Cooperation

ProPakistani has learned the government has informed the lender of its intention to implement all demands in order to stay on the EFF program and complete it. The Pakistan side has clarified that all difficult decisions will be taken gradually, while sustainable institutional reforms will be exercised without delay.

Technical-level talks between Pakistan and IMF will continue till Friday. During the period, both sides will exchange crucial economic data which will pave the way for policy-level discussions scheduled till February 9th, 2023.

Meanwhile, the IMF mission will meet Federal Board of Revenue (FBR) officials today. Officials said Chairman FBR and board members will brief the lender on the tax regulator’s revenue targets for the ongoing financial year, including a briefing on withholding tax, flood levy, tax on non-filers, and additional tax collection measures via Ordinance.

It bears mentioning that 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.